Bitcoin News Today: Bitcoin Volatility Drops Below 40 as Spot ETFs Stabilize Market

Bitcoin’s volatility has shown a notable decline since the introduction of spot ETFs, marking a pivotal development in the cryptocurrency’s journey toward mainstream acceptance. According to Bloomberg ETF analyst Eric Balchunas, Bitcoin’s 90-day rolling volatility has fallen below 40, a significant drop from previous levels that frequently exceeded 60 [1]. This decline, observed since the launch of spot Bitcoin ETFs in early 2024, signals a more stable market environment and reflects the growing influence of institutional investors and regulated financial infrastructure [1].

The Bitcoin Volatility Index on Deribit has mirrored this trend, declining from around 90 to 38 in recent months [1]. This shift is attributed to increased accessibility and liquidity brought by spot ETFs, which have helped reduce speculative trading and foster a more predictable price environment. Analysts suggest that the narrowing volatility gap between Bitcoin and gold—a benchmark for stable assets—further underscores this trend [1].

The introduction of spot ETFs has also led to higher institutional demand for Bitcoin, with BlackRock’s iShares Bitcoin Trust (IBIT) becoming one of the largest holders of the asset, reportedly holding over 700,000 coins [1]. Despite a recent $292.5 million outflow from BlackRock’s fund on August 1, the broader picture remains one of strong institutional interest, with $5.2 billion in inflows recorded in July [1]. This pattern indicates that while short-term fluctuations are inevitable, the long-term appeal of Bitcoin for institutional portfolios is growing.

Other spot Bitcoin ETFs have shown mixed performance. Fidelity’s Wise Origin Bitcoin Fund (FBTC) and Grayscale Bitcoin Trust (GBTC) both experienced outflows, with FBTC losing $40 million and GBTC dropping $10 million. In contrast, Bitwise’s fund recorded a positive inflow of $18.7 million [1]. These flows highlight the dynamic nature of the market as investors adjust their positions amid price corrections and profit-taking behavior.

Regulatory developments have further supported the decline in volatility. The SEC’s decision to increase position limits for Bitcoin ETF options has been cited as a factor in reducing price swings and enhancing market stability [1]. Additionally, the transition from a case-by-case approval process to a standardized framework for crypto ETFs has contributed to greater clarity and legitimacy for Bitcoin as an investable asset [1].

Despite recent price corrections and ETF outflows, the broader trend remains positive. In July alone, the overall inflow into digital assets reached $60 billion, outpacing flows into private equity and hedge funds [1]. This indicates a growing role for Bitcoin in diversified portfolios, driven by its reduced volatility and clearer regulatory landscape.

As the market continues to evolve, the structural changes brought by spot ETFs—enhanced liquidity, institutional participation, and regulatory clarity—suggest a maturing digital asset ecosystem. With these developments, Bitcoin’s trajectory is increasingly shaped by the interplay between regulation, institutional adoption, and market dynamics.

Source: [1] BlackRock Bitcoin Fund Experiences Largest Outflow in 9 Weeks (https://coinmarketcap.com/community/articles/6891b0e93ef53d6dd41fa1cb/)