Bitcoin, once notorious for its sharp price swings that could double or halve its value in a matter of days, is now showing a markedly calmer profile. Recent trends reveal a significant decline in its volatility, setting it apart from former trading patterns.
Shift in volatility landscape
Based on TradingView data, Bitcoin’s 30-day realized volatility currently stands at 42 percent and has remained below 50 percent throughout the month. In contrast, South Korea’s leading stock index, Kospi, attracted attention with a volatility rate hitting 74 percent last week and still hovers around 51 percent. Similarly, Pakistan’s KSE 100 index is showing volatility at roughly 51 percent as well.
The decrease in Bitcoin’s fluctuations gained momentum following the launch of spot ETFs in the United States in January 2024. These instruments enabled institutional investors to enter the market in a more controlled manner, producing steadier capital inflows that have notably dampened price swings.
Geopolitical dynamics and Bitcoin’s new role
As volatility subsides, Bitcoin is increasingly being viewed as a hedge distinct from traditional assets in times of geopolitical unrest. River, a financial institution specializing exclusively in Bitcoin, noted earlier this month that BTC has outperformed traditional havens like gold and the S&P 500 during periods of conflict.
Nevertheless, most major stock indices still display lower volatility than Bitcoin, with South Korea standing out as an exception due to its unusually elevated index movements.
According to River, Bitcoin has managed to hold its value during times of conflict, offering stronger geopolitical protection compared to traditional assets.
Why is the Korean stock market so volatile?
One of the main factors fueling South Korea’s high volatility is its sensitivity to energy price fluctuations. The country relies on imports for nearly all its fossil fuel needs, including oil and natural gas. Tensions soared at the end of February when war broke out between Iran and the US-Israel alliance. Closure of the Strait of Hormuz created major disruptions in energy supply chains, and the surge in oil prices placed pronounced pressure on the Kospi index.
The Kospi index, which dropped from 6,340 points at the end of February to 5,000 by the end of March, rebounded above 6,380 as the conflict eased, marking a historical high. Pakistan’s stock market saw similar patterns due to the country’s sensitivity to energy markets, amplifying volatility even further.
Throughout this period, Bitcoin traded within a narrow price range, buoyed by fresh inflows to US-listed spot ETFs, with values staying between 65,000 and 75,000 dollars.
Market experts emphasize that sudden shifts in energy prices have driven volatility in the stock markets of countries like South Korea and Pakistan, while the rising participation of institutional investors has brought relative stability to Bitcoin.
