Bitcoin has a well-deserved reputation as a volatile asset that has historically doubled or halved in a matter of months. That may be about to change.
Bitcoin’s 30-day realized volatility, currently 42%, has remained below 50% this month, according to TradingView data. Compare that to South Korea’s benchmark Kospi stock index, whose market capitalization is about double that of the biggest cryptocurrency, which hit 74% last week and is still around 51%. Another more volatile stock market is Pakistan, whose KSE 100 index is also around 51%.
Bitcoin’s volatility – a measure of how wildly prices have fluctuated – has fallen steadily in recent years, especially since the introduction of spot ETFs in the US in January 2024. These investment vehicles have increased institutional participation, which has brought more risk-managed capital flows that have helped dampen price volatility.
The relative stability underscores its appeal as a geopolitical hedge that holds its value when macro forces like wars destroy traditional assets. BTC has historically outperformed gold, the S&P 500 and other traditional assets during wars, as River, a bitcoin-only financial institution, pointed out earlier this month.
Still, most major regional markets and their global counterparts showed less volatility than BTC during the period. Which begs the question: Why is South Korea, the world’s 14th largest economy, doing any different?
Korean problems
The higher volatility in Korean stocks largely reflects the fluctuations in the price of fossil fuel, which is not really the case for bitcoin.
The Kospi fell from 6,340 points at the end of February to 5,000 at the end of March before rising to record highs above 6,380 points.
The first sale occurred in the run-up to the war between Iran and the US-Israeli coalition, which started on February 28, eventually leading to the closure of the Strait of Hormuz, a major oil supply route. This disruption and the resulting rise in oil prices hurts South Korea because the country imports almost all of its fossil fuels, including oil and natural gas from the Middle East.
Later, the index found its footing as the conflict eased and the two sides negotiated a temporary ceasefire, which is set to expire on Wednesday. Pakistan’s stock market experienced similar fluctuations, with its economy equally, if not more, exposed to disruptions in the energy market.
Throughout this time, bitcoin remained relatively stable, mostly trading between $65,000 and $75,000, supported by renewed access to the US-listed spot exchange-traded funds (ETFs).
