But an unavoidable consequence of bringing such enhanced efficiency to the shares of any young project is extreme volatility. Most startups fail, and investing in one is making a bet in a race against oblivion. So do outside developments, like getting a liquor license. The distribution of eventual outcomes for any business is widest at birth, so rational investors have no choice but to constantly overreact.

Landing a liquor license might make them quadruple, while a bad review may make them tank. Given the uncertainty, external developments would also have an amplified impact. A new restaurant is more vulnerable to things like dining fads or bad weather than an established one.

Everything Is Bigger on Blockchain Crypto investors grapple with a stronger version of this phenomenon because everything is borderless, and the total addressable market is huge. Unlike a new community bank, a blockchain-based lending protocol could theoretically serve hundreds of millions of people all over the world. Success could mean significant value accrual to its token, but the project could also fail. Early investors have no choice but to flail back and forth between hope and despair.

Crypto investors have no such option. Most digital assets are a hybrid and transition from one category to another throughout their lifecycle. Ether, for instance, started as a security, as its coins were sold up front to fund development. But once the blockchain launched, it transitioned to being a cross between a currency and a commodity. Some people used it as a store of value or medium of exchange, while others used it to pay for transaction validation and code execution. Today, it has evolved even further to a yield-bearing instrument, a collateral asset for borrowing, a reference currency for NFTs, and the means by which validators participate in consensus.

All of these attributes make it difficult to assess the value of even the most mature crypto project, never mind the thousands that have launched recently. A skeptic could argue that these challenges are the very reason why nascent projects should not have tradable equity.

But such restrictions have their own drawbacks. Lack of access to startup investing has contributed to the growing wealth gap. Other investments like real estate or collectible art had too high an entry price for most people. Bitcoin was the lone exception, the only high-performing asset that was universally accessible and fractionally ownable from day one.

Price swings communicate important information to founders and investors, particularly during the crucial adolescent stage of any startup. And restricting price discovery to periodic funding rounds negotiated with a handful of investors can be dangerous. Despite multiple red flags for both companies, there was little price information until the bitter end.

The Good News About Bad News Universal access, immediate price discovery, and greater transparency also contribute to both the reality and the perception of scams and shady behavior in crypto. Like any technology that removes friction, the ease with which new projects can be launched has been a boon to con artists and fly-by-night operators, in the same way that the accessibility and efficiency of email led to a spike in supposed Nigerian princes looking for a place to park their money.

But it is safe to assume that the rate in crypto is not as high as it seems. But total transparency makes crypto look worse than it is. Disingenuous entrepreneurs raising money from unsuspecting marks is an ancient practice in every industry. A cryptocurrency price crash and the onset of a new so-called "crypto winter" has left many companies in the industry facing a liquidity crisis. Artur Widak Nurphoto Getty Images While bitcoin's price is stuck lately, there is one good thing to come from it for investors betting on crypto to become a legitimate asset class: It's less of a wild ride.

The data provider said Friday that the cryptocurrency's day rolling volatility has now fallen below that of the stock indexes for the first time since On Monday it had fallen enough just to match the Nasdaq's volatility. That's welcome news to many longtime crypto investors who hope that a mellowing of crypto's notorious price swings could bring less fear to potential new investors. Kaiko also said the gap between bitcoin's and equities' day and day volatilities has been shrinking since the middle of September, even with bitcoin's heightened sensitivity to macroeconomic data releases.

Though bitcoin's correlation with stocks has eased, it remains high and its price continues to be driven by macro themes. The data suggests that cryptocurrency markets are less reactive to volatile macro events than they were earlier on in the year, whereas equity markets have remained highly sensitive.

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