I think that what we also forget to mention is the moving trend when we talk about volatility. Two different things can have the same rates of volatility, but one can have a positive (appreciating) and the other a negative (depreciating) trend. An asset such as Bitcoin can't possibly have volatility as low as the best currencies because it is still in its value discovering phase. I believe this phase will continue for a few more cycles. At the point where we are now, it must either go to the million range or it will go bust.
I agree with what you wrote about price discovery, and it would be interesting if there was data about Bitcoin volatility "taking out" the general bullish trend. I'm currently not aware of such a chart, but it may be possible to calculate it based on daily exchange data. And it's indeed likely that this would bring Bitcoin even closer to "average" currencies. This value could be part of a metric to evaluate the "usefulness" of Bitcoin as a currency/savings alternative to average people, including the unbanked.
Where I don't agree is that Bitcoin "must go into the million range or it will go bust". Even if it stays in the current price range, or even lower, Bitcoin would still be a valuable "niche" currency. I also honestly think that the volatility-adjusted price trends (like "rainbow charts") hint that we'll not reach the million that easily, but of course an extreme bullish cycle is still possible, for example if Bitcoin truly is perceived by the markets to rival gold.
I strongly disagree with this. All the bullishness comes only from two activities the ETFs and Bitcoin treasuries, nothing else. The macro environment is terrible. There are wars everywhere, interest rates are high and quantitative tightening is still going on.
I was referring only to the Bitcoin price trend itself. However, several stock markets were also rallying in the past years despite of the tightening.
I would like to pose another question as a counter. Assuming the USD is the strongest currency, how much have savings been devalued in real terms in just the last 5 years? I'm not talking about officially fabricated numbers, but the real market value of the dollar. I think these days we can safely consider saving in other currencies more risky.
I think if you compare the USD purchasing power loss into account the Bitcoin performance in the past 5 years you're of course correct. Even the "official" numbers hint to at least a 30-40% "USD dip", and if we take into account real estate prices for example it may be lower [1]. So a 50% Bitcoin dip would not look that scary if we assign a high likelihood to a recovery in 2-3 years.
However the Bitcoin dips have been more in the 75-85% range until now. I hope 2022 was the last time we saw that, but it's not impossible that price discovery also could go into another direction eventually. This is related to what I wrote above: it's possible that Bitcoin will stay relatively "niche", i.e. not seriously rival gold for example, but without being a failure. And we don't know still where the equilibrium of that scenario could be. My own personal estimation is that we're still lower than for that scenario (it could be at a $150-200k Bitcoin) but it's not out of the question that the equilibrium is below 100k.
[1] Real estate however has several catches as a metric, often larger cities (which are currently bubbling due to a strong rural -> urban movement in the last 15-20 years) are overrepresented in the price data, and also external effects like costs to maintain a property, which in some countries is very high due to bad urban planning, can influence the price.