Bitcoin’s volatility falls below the Nasdaq and S&P 500 for the first time since 2020

While bitcoin’s price has been stuck lately, there’s one good thing to come from it for investors betting on crypto to become a legitimate asset class: It’s less of a wild ride.

After hovering in the $19,000 level for more than a month, bitcoin’s volatility is now lower than that of both the Nasdaq and the S&P 500, according to Kaiko.

The data provider said on Friday that the cryptocurrency’s 20-day rolling volatility has now fallen below stock indexes for the first time since 2020. On Monday, it had fallen enough to match the Nasdaq’s volatility. That’s welcome news for many longtime crypto investors who hope that a softening of crypto’s notorious price swings might bring less fear to potential new investors.

Kaiko also said that the gap between bitcoin and stocks’ 30-day and 90-day volatility has narrowed since mid-September, even with bitcoin’s increased sensitivity to macroeconomic data releases. (Although bitcoin’s correlation with stocks has declined, it remains high and its price continues to be driven by macro themes.)

“Bitcoin volatility is at multi-year lows, while stock volatility is only at its lowest level since July,” Clara Medalie, head of research at Kaiko, told CNBC. “Stock markets have certainly been volatile in recent months due to high inflation, an appreciating dollar, rising interest rates, and the ongoing war and energy crisis. The data suggests that cryptocurrency markets are less reactive to volatile macro events than they were in the past. on the year, while stock markets have been very sensitive.”

On Friday, bitcoin fell below the $19,000 level, following a brief rally in the dollar index and as the 10-year US Treasury yield rose to a 14-year high. It recovered a bit, and has been above the flat line ever since.

Bitcoin price was last down less than 1% at $18,966.00, according to Coin Metrics. Earlier in the day, it fell as low as $18,677.50. Ether also fell less, trading at $1,283.80, after finding an earlier low of $1,254.80.

On Friday, the U.S. 10-year Treasury yield rose as high as 4.308% for the first time since 2008, but retreated after a report that some Federal Reserve officials are worried about tightening rate hikes. The dollar index also briefly jumped to a session high of 113.906 before shedding most of its gains.

The two largest cryptocurrencies by market capitalization are about to close out a week and their third consecutive negative week in what is historically a strong month for crypto returns. For the month, bitcoin and ether are down approx. 1% and 3%.

“Although we have seen some signs of falling housing demand and lower inflation this week, the market is on high alert for next month’s FOMC meeting and is ignoring the economic data that may justify a more cautious approach to rate hikes,” said Yuya Hasegawa, crypto market analyst at Japanese crypto exchange Bitbank.

“We probably won’t see any big movement before the meeting,” he added. “But the area around $19,000 is likely to continue to be a support for the price of bitcoin.”

— CNBC’s Christina Cheddar Berk contributed reporting