Bitcoin's March Volatility Surges to 71.28% Amid Tariff Fears

In March, Bitcoin's price volatility reached its highest level in nearly a year, marking a significant shift from the relative stability observed in the previous month. The annualized 30-day volatility of Bitcoin surged to 71.28% on March 24, the highest point since April 14, 2024. This volatility was driven by substantial price fluctuations, with Bitcoin's value climbing above $94,000 early in the month and then plummeting to nearly $77,000 as mid-month approached.

This volatility in March stood in stark contrast to February, when the annualized 30-day volatility had dropped to 30.98% on February 23. At that point, the measure was close to half of the 61.25% that Bitcoin had averaged for more than a decade, dating back to figures gathered in 2013. The sharp price fluctuations in March highlighted Bitcoin's historical tendency to experience intense volatility, a characteristic that has defined the cryptocurrency since its inception in 2009.

The heightened volatility in March can be attributed to several key factors. Firstly, the upcoming U.S. tariffs created a sense of uncertainty among investors, leading to increased market volatility. Secondly, the broader macroeconomic environment was characterized by deep uncertainty, which further contributed to the volatility in the cryptocurrency market. Additionally, the cryptocurrency market has been navigating sharp volatility and renewed selling pressure, which has been a recurring theme in recent months.

Despite the volatility, Bitcoin has shown resilience, with its price surging over 2% to exceed $84,000 at one point. This bullish run was led by memecoins and tokens associated with artificial intelligence, which have been driving the market higher. However, the momentum built in the first quarter of the year was dampened by tariff fears, leading to a 12.7% drop in the first quarter—the worst since the initial coin offering (ICO) boom.

The volatility in March also had implications for Bitcoin's price formation. According to a recent analysis, Bitcoin's price formation is a result of short-term fluctuations driven by investor sentiment and daily trading frequency, medium-term fluctuations triggered by significant events, and the long-term price trend determined by macroeconomic factors and market vitality. Over time, the influence of Bitcoin's production and transaction on its price has gradually diminished, while the impact of macroeconomic factors has increased.

The heightened volatility in March serves as a reminder of the inherent risks and uncertainties in the cryptocurrency market. Investors should be prepared for continued volatility and be cautious in their investment decisions. Despite the challenges, Bitcoin's resilience and its ability to navigate through uncertain times have been a testament to its growing acceptance and adoption as a store of value and a medium of exchange.