Bitcoin's Volatility Drops Below S&P 500, Nasdaq 100 Amid Market Turmoil

In a surprising turn of events, Bitcoin's volatility has dipped below that of major traditional assets, the S&P 500 and Nasdaq 100, over the past ten trading sessions. According to analysts at Galaxy Digital, Bitcoin’s realized volatility stood at 43.86, while the S&P 500 and Nasdaq 100 recorded volatilities of 47.29 and 51.26, respectively. This shift is unusual for a digital asset traditionally known for its high volatility.

This development comes against a backdrop of renewed financial turbulence, with traditional markets experiencing significant fluctuations. Since the announcement of tariffs by the US President, traditional markets have shown signs of instability. The Nasdaq Composite has remained relatively flat, while the Bloomberg Dollar Index fell nearly 4%. Even gold, typically seen as a safe haven, briefly hit $3,500 per ounce before pulling back to a 5.75% gain. Despite this turmoil, Bitcoin surged 11% over the same period, reinforcing its evolving role as a macro hedge amid geopolitical and fiscal uncertainty.

Analysts noted that Bitcoin still maintains elevated 30-day correlations with major indexes, around 0.62 with the S&P and 0.64 with the Nasdaq. However, its beta has declined, indicating that investors may be treating it less as a high-risk asset and more as a long-term allocation. Chris Rhine, head of liquid active strategies at Galaxy, explained that Bitcoin, as a non-sovereign asset, does not rely on the full faith or tax basis of a nation to support its integrity.

This recent investor behavior mirrors what was observed during the 2018–2019 US-China trade tensions when Bitcoin rallied amid rising global uncertainty. Hank Huang, CEO of Kronos Research, suggested that surging ETF inflows and ongoing Bitcoin purchases by institutions are helping reshape Bitcoin into a digital version of gold, less tied to equities. As institutions deepen liquidity, volatility drops, making Bitcoin a cornerstone for portfolios.

Galaxy’s OTC trading desk described the market posture as “tactically cautious but structurally constructive,” marked by disciplined leverage and low hedging stress. With 95% of Bitcoin’s total supply already mined and growing interest from institutions, ETFs, and even governments, Bitcoin is increasingly being viewed as a digital store of value. Ian Kolman, co-portfolio manager at Galaxy, stated that Bitcoin’s supply and demand dynamics are solidifying its place as a mature digital store of value.

Jay Jacobs, head of thematics and active ETFs, noted that there has been a long-term trend where countries have been reducing their reliance on dollar-based reserves in favor of assets like gold and, increasingly, Bitcoin. Geopolitical fragmentation is fueling demand for uncorrelated assets, with Bitcoin increasingly viewed alongside gold as a safe-haven asset. This shift highlights Bitcoin's growing acceptance as a stable and reliable investment option, even in times of market volatility.