Since the end of 2016, the 90-day volatility of the spot value of bitcoin vs. the dollar has been about 5.6 times that of the volatility of the dollar vs. Turkish lira and about 4.9 times the 90-day volatility of the South African rand — two currencies that were highly volatile over the observed period. Further comparisons show that bitcoin was also more volatile than the S&P 500.
For a currency to be viable, its holders need to be confident that it will hold its value relative to other currencies on a day-to-day basis. While bitcoin has failed to do that since at least 2016, it hasn’t stopped large institutional investors from allocating assets that way. Major endowments like those of Yale, MIT and Harvard have dipped their toes and some large U.S. pension plans are starting to follow their lead. Despite having little use as a store of value, there have been signs of diversification benefits as little to no correlation between the cryptocurrency and the S&P 500 has been observed over the previous three-year period.