Why would it decrease? Bitcoin was way less volatile in the past.

The article I linked to explains it. Basically: there will be more market depth, less friction in trading bitcoins, etc.

Also, a linear regression (important) shows that Bitcoin's volatility HAS decreased over the last 5 years.

There are many manipulative articles. The higher the price of Bitcoin is, the more people will be willing to sell and less willing to buy.

No. If what you said was true, then high-priced stocks (shares of Apple, or Berkshire Hathaway) would be very volatile.

In fact, it is the reverse: low-priced stocks (penny stocks) are the most volatile.

Well, Apple has billions of cash, tons of patents, significant market share, a great brand, and many other assets. Not the case with Bitcoin.

This is irrelevant to your original false claim (that a unit or share of something is inherently volatile, if it is highly priced.)

I wasn't making a general statement, I was talking about Bitcoin - people buy many things just because they are expensive, well, the rich people at least. BTC is dropping again after it couldn't break above $1,000. Any comment on stock spits then?

Data shows your statements are wrong. Volatility is decreasing - look at the next to last graph in this article: http://bitcoinmagazine.com/6543/bitcoin-volatility-analysis/

(Stock splits are irrelevant. Yes a split by itself does not affect volatility. I was just making a comment that, generally speaking, penny stocks are more volatile that highly-priced stocks.)

A stock split is not irrelevant as it "lowers" the unit price - it has a strong psychological effect. Not sure if you've noticed, but some sites started to use mBTC instead of BTC when it broke $1,000! Volatility is decreasing as people aren't as hyped up as they were and don't rush to buy at any price anymore. What you see is people waiting and meanwhile doing decent day trading profits from the small movements up and down. BTC couldn't break 1,000 USD and 6,000 CNY, so, naturally, it's falling again.