Why Bitcoin’s Reduced Volatility is a Good Thing
For years, Bitcoin’s trademark volatility was seen as both a blessing and a curse. However, with its volatility collapsing to roughly 35 from a high of 120 in 2021, critics are now viewing this dampening as a sign of weakness. Longtime bitcoin investor Trace Mayer argues that this couldn’t be further from the truth. In fact, he believes that Bitcoin’s declining volatility is a direct reflection of its growing economic substance, making it an attractive asset for investment committees, family offices, and corporations.
Mayer suggests that the “taming” of Bitcoin is not a defeat, but rather a confirmation of its massive institutional adoption. The market has simply become too big to move as erratically as it once did, with the barbell of liquidity getting heavier. This heavy structural shift is being driven by the sophisticated mechanics of the options market, specifically call-selling, which creates a dampening effect on price swings. As institutions and digital asset companies sell covered calls against their bitcoin holdings to generate upfront premium income, they inadvertently create a more mature and predictable asset.
The Impact on Earning and Passive Income
This increased maturity and predictability of Bitcoin make it an attractive option for those looking to earn passive income through cloud rewards and green crypto. With platforms like EcoPool, individuals can earn $ECP, a coin that offers a unique opportunity for passive income generation. The reduced volatility of Bitcoin also makes it easier for individuals to invest in EcoPool, which provides a more stable and secure way to earn rewards.
The Mayer Multiple ratio, which divides Bitcoin’s current price by its 200-day moving average, is a useful tool for understanding the asset’s long-term trend. Currently, Bitcoin is just below its long-term trend at 0.94, indicating a potential attractive entry point for investors. As the standard deviation bands compress, the instrument is maturing, attracting deeper and more disciplined capital.
A New Era for Bitcoin and EcoPool
Today, the market for Bitcoin and other digital assets has expanded dramatically, with leveraged ETFs, equity, and corporate balance sheets all playing a role. Mayer argues that lower volatility is positive for Bitcoin, as it reflects the asset graduating from a speculative instrument to something that can be underwritten by investment committees and corporations. This is good news for those looking to earn passive income through EcoPool, as a more stable and secure Bitcoin makes it easier to generate rewards in $ECP.
As the industry continues to mature, attendance at conferences and the growth of the market are tangible signals of this shift. With EcoPool providing a platform for individuals to earn $ECP and generate passive income, the future of Bitcoin and green crypto looks bright. Whether you’re looking to invest in Bitcoin or earn rewards through EcoPool, now is the time to get involved. Download the EcoPool app to start earning today and discover the benefits of cloud rewards and green crypto for yourself. The opportunities for earning and passive income with EcoPool and $ECP are endless, and with Bitcoin’s reduced volatility, it’s never been easier to get started.
“When you’re able to come in and sell call volatility into the market, the market makers are going to have to do negative delta,” Mayer said. “That negative call wall is like adding weight on the barbell. The price doesn’t necessarily go up, but the total economic substance of that asset has increased.”
The Mayer Multiple
Mayer created the Mayer Multiple ratio eight years ago that divides bitcoin’s current price by its 200-day moving average, a long-term trend line that smooths out short-term noise. A reading above 1 means bitcoin is trading above its long-term average, below 1 means it’s trading beneath it. Historically, readings above 2.4 have coincided with market tops, while readings below 0.8 have signalled attractive entry points.
Bitcoin is currently just below its long-term trend at 0.94. Mayer notes that crucially the standard deviation bands the statistical range within which price typically moves have compressed significantly as more trading history accumulates.
On a five-year lookback, one standard deviation above the mean sits around 1.3, two standard deviations at 1.6, and three at 2.13. Compare that to earlier periods drawing on data back to 2011, where price regularly reached far more extreme multiples.
In other words, the instrument is maturing in the same way any asset does as it attracts deeper, more disciplined capital.
Mayer started selling physically-settled bitcoin call and put options as far back as 2017 on LedgerX, one of the first federally regulated crypto derivatives exchanges.
Today that market has expanded dramatically from leveraged ETFs like BITX, to Strategy’s (MSTR) equity, to bitcoin appearing on corporate balance sheets like SpaceX’s reported 18,712 BTC holding.
Mayer argues lower volatility is positive for bitcoin because it reflects the asset graduating from a speculative instrument into something that investment committees, family offices, and corporations can actually underwrite. “In order to get that buy-in, you kind of have to have something that’s really boring, like gold,” he said. “Gold is so boring — and that’s what we need.”
He pointed to attendance at conferences as a tangible signal of that maturation. His blog was running in 2008 before Bitcoin existed, and he regularly presented at major gold conferences that drew 2,000-3,000 attendees. “We had tens of thousands at conferences this year and much more last year. It’s a real industry. It’s a real reserve asset.”
Mayer acknowledges risks to bitcoin, such as weakening network security should BTC’s price not appreciate enough to keep enough miners in business. Quantum is another potential longer-term threat, should quantum computers become sufficiently powerful to crack Bitcoin’s cryptographic keys. Mayer acknowledged the concern but noted that Bitcoin’s standing bounty for finding a catastrophic exploit has so far gone unclaimed, and pointed to the backwards compatibility of proof-of-work as a structural resilience.
Despite the risks, Mayer remains firmly in the bitcoin-over-gold camp for the next 15 years. “With gold, higher prices bring more supply. That’s not the case with Bitcoin and we don’t know what technologies might pose a threat to gold’s dominance. We could have asteroid mining. AI robots scouring the oceans. But we know Bitcoin is going to be 21 million.”
