Bitcoin is now less volatile than the S&P 500, Nasdaq for the first time since 2020

In the midst of economic chaos, Bitcoin remains relatively stable. For the time being anyway.

Bitcoin’s 20-day realized volatility, a metric that measures the daily changes in the price of Bitcoinhas fallen below both the Nasdaq and S&P 500 levels for the first time in two years, according to findings published this week by crypto data provider Kaiko.

In layman’s terms, Bitcoin’s price has been much less volatile over the past three weeks. Just before the 20-day period in question, volatility in both crypto markets and stocks had reached a 40-year high.

Hot inflation readings from the US economy have led many to expect that the Federal Reserve’s terminal rate (the peak of its rate hikes) may still be a long way off – the Fed has already raised rates by 0.75% three times this year, the first of which was the steepest single ride since 1994.

Kaiko also says that the gap between the 30-day and 90-day volatility readings for both Bitcoin and stocks has narrowed since the second half of September.

Both the Nasdaq 100 and S&P 500 are down about 10% since the beginning of that month.

This is the first time since October 2020 that Bitcoin has been less volatile than the Nasdaq.

It is also the first time since August 2020 that the world’s largest cryptocurrency has been more stable than the S&P 500.

Kaiko unwraps the numbers

Kaiko’s research director Clara Medalie told Decrypt via email that “BTC volatility has been falling since early July,” which is around the time the industry began to take stock of the liquidity crisis that emerged in the wake of Terra’s collapse.

Crypto trading volumes have remained flat despite low volatility, suggesting that trading activity has remained consistent.

On the other hand, stocks have seen increases in volatility “due to a number of factors, including high interest rates, an appreciating dollar, persistent inflation, the energy crisis and war,” she added.

Medalie also said that despite the current $19,000 — a far cry from its November 2021 record high of roughly $69,000 — Bitcoin now appears to be acting as a sort of buffer against macroeconomic uncertainties: “The differences in market activity for the two asset classes suggest that cryptocurrencies are more resilient to the recent volatility-inducing macro events.”

Bitcoin has been at times closely correlated with stocks, although crypto advocates would rather it not, because it was designed to be an alternative to traditional financial investments.

However, data from IntoTheBlock’s correlation matrix records Bitcoin’s current correlation coefficient to both the Nasdaq and the S&P 500 as approx. 0.3. The closer this number is to zero, the less correlation there is. The closer to 1, the more the markets are correlated.

In short: Bitcoin is real starting to disconnect from shares this autumn. The question is, will it stay that way?