Bitcoin has a well-deserved reputation as a volatile asset that has historically doubled or halved in a matter of months. This may be changing.
Bitcoin’s 30-day realized volatility, currently at 42%, has remained below 50% this month, according to TradingView data. Compare that with South Korea’s benchmark Kospi stock index, whose market capitalization is about twice that of the largest 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 the magnitude of price swings – has steadily declined in recent years, particularly since the introduction of spot ETFs in the United States in January 2024. These investment vehicles have increased institutional participation, generating more risk-managed capital flows, which has helped smooth price swings.
The relative stability underlines its appeal as a geopolitical hedge, retaining its value when macroeconomic forces such as wars take their toll on traditional assets. BTC has historically outperformed gold, the S&P 500, and other traditional assets during the wars, as noted by River, a Bitcoin-only financial institution, earlier this month.
Nonetheless, 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, any different?
Korean issues
The higher volatility of Korean stocks reflects, to a large extent, fluctuations in the cost of fossil fuels, which do not really apply to Bitcoin.
The Kospi rose from 6,340 points at the end of February to 5,000 at the end of March, before rebounding to reach record highs above 6,380 points.
The first sell-off occurred in the run-up to the war between Iran and the US-Israeli coalition, which began on February 28 and ultimately led to the closure of the Strait of Hormuz, a major oil supply route. This disruption and the resulting surge in oil prices hurt 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 has seen similar fluctuations, with its economy equally, if not more, exposed to energy market disruptions.
Throughout this period, bitcoin remained relatively stable, trading mainly between $65,000 and $75,000, supported by further inflows into US-listed spot exchange-traded funds (ETFs).
