Bitcoin Volatility Plummets Below Stocks Amid Conflict: A Crucial Shift
Is Bitcoin becoming a safe haven? Recent data reveals a surprising trend: Bitcoin volatility has dropped below that of major US stock indexes, even during heightened geopolitical tensions like the Iran-Israel conflict. This shift suggests a maturing asset class and has significant implications for the broader crypto market.
Why Bitcoin Volatility is Falling
Data from Bitwise Europe’s Head of Research, André Dragosch, shows Bitcoin’s 60-day realized volatility is now lower than key stock benchmarks. As of late June, Bitcoin’s volatility sat around 27-28%.
Compare this to:
- S&P 500: ~30%
- Nasdaq 100: ~35%
- “Magnificent 7” Tech Stocks: ~40%
This low volatility is notable because it occurred despite escalating tensions in the Middle East, including US actions against Iran. In the past, such events triggered much larger swings in Bitcoin price. For example, during the start of the Russia-Ukraine war in February 2022, Bitcoin’s volatility soared to 60-65%, significantly higher than US equities at the time. The current muted reaction suggests a change in how the market perceives and reacts to external shocks, pointing towards Bitcoin’s growing maturity.
The Impact of Long-Term Holders and Institutional Demand
A major factor contributing to Bitcoin’s recent stability is the behavior of long-term holders. According to Glassnode analysts, these experienced investors are holding onto their Bitcoin, effectively reducing the available supply on exchanges. As of June 23, the total supply held by long-term holders reached a record high of 14.53 million BTC (30-day average), representing nearly 70% of the total possible 21 million Bitcoin supply.
Furthermore, Glassnode points out that a significant portion of the circulating supply, over 30%, is concentrated among 216 centralized entities. These include Bitcoin ETFs, exchanges, custodians, and corporate treasuries. This concentrated ownership, coupled with the steadfast holding by long-term investors, tightens the supply side of the market.
Simultaneously, institutional demand for Bitcoin continues to rise. This combination of decreasing available supply and increasing institutional interest creates sustained upward pressure on the Bitcoin price. This dynamic is seen as a key driver for future price growth.
What’s Next for Bitcoin Price?
Market observers like BitMEX co-founder Arthur Hayes and OSL chief commercial officer Eugene Cheung anticipate Bitcoin’s price will continue its upward trajectory, potentially surpassing the $100,000 mark. Their outlook is supported by factors such as ongoing central bank money printing globally and strong institutional backing for Bitcoin.
Some analysts are even more optimistic, projecting the Bitcoin price could rise above $150,000 by the end of 2025. While predictions vary, the underlying sentiment remains positive, fueled by the fundamental supply/demand dynamics highlighted by the actions of long-term holders and increasing institutional demand.
It is important to remember that all investments carry risk. Readers should conduct their own research before making investment decisions.
Conclusion: A Maturing Crypto Market?
Bitcoin’s reduced Bitcoin volatility relative to traditional stocks, even during geopolitical uncertainty, signals a potential shift in its status. The data suggests that the crypto market, led by Bitcoin, is demonstrating increased maturity. The growing base of dedicated long-term holders and the consistent rise in institutional demand are creating a powerful supply-demand imbalance that many believe will continue to drive the Bitcoin price higher in the coming years. This period of relative stability amidst external shocks could be a sign of Bitcoin solidifying its position as a significant global asset.
