I don’t buy it. Those institutional traders have plenty of access in 2021 and it’s still as volatile as ever. The extreme volatility is what makes them their money and also convinces the casual investor to put money into Bitcoin because they think it might 100X again.
If the volatility stops, so does the crypto party. Big traders don’t want it to stop.
Crypto needs a strong financial network of derivative products. There need to be instruments to hedge the price risk for short periods. There's no reason you shouldn't be able to cap movements for a fixed time period, limiting the amount you can lose. So if I want to use it as transfer of fiat, I should be able to do so within a reasonable timeframe.
Crypto is popular with traders because it's volatile and fragmented.
BTC's price itself has grown much less volatile.
> the volatility spikes in Bitcoin were most extreme in 2011, with subsequent spikes in volatility lessening over time
https://bitcoinist.com/looking-at-bitcoin-volatility-over-th...
And as you say, that's the appeal anyway.
"Presumably" is the key word.
There is nobody to verify that the billions in Tether, BUSD and USDC used to buy BTC (and influence the price) are backed by real dollars.
They are not related. Gold, oil and gas are also very volatile and have massive market caps.
This doesn't matter, however. There will be traders who make market that will buy the volatility during the transaction for a fixed fee.
Something I suspect we often forget about in the world of stable reserve currencies is that the majority of the world can't run floating exchange rates without encountering major volatility. Standard Fiat/Gold backed currencies generally require some large institution to control the currency price either via money supply, foreign currency supply, gold, or government decreed exchange rates. When these institutions fail currencies tend to have rather extreme swings.