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- Traditional asset S&P 500 has assumed intense volatility in the past few weeks.
- Bitcoin dominance threatens traditional assets as investors weigh a balanced portfolio strategy.
Investors are slowly moving away from US assets, fueled by President Donald Trump’s aggressive trade policies. At the same time, volatility has increased substantially for the S&P 500 compared to Bitcoin (BTC).
Spike in S&P 500 Volatility
Wall Street has often criticized Bitcoin for its volatility, but the situation is now the same for the S&P 500. According to TradingView data, the S&P 500’s seven-day realized volatility has surged from an annualized 50% to 169%. This is the highest level seen since the COVID-19 pandemic crash in 2020.
On the other hand, Bitcoin’s seven-day realized volatility doubled to 83%. Although the figure is high, it is much lower than the S&P 500. This suggests Bitcoin’s possible transition as a low-beta hedge against traditional stocks. Additionally, the flagship coin appears less volatile than the S&P 500 on a 30-day basis.
The dramatic spike in the S&P 500 volatility has raised concerns among market participants. CoinShares’ Head of Research, James Butterfill, questioned whether investors should trust assets highly subject to human error and political influence.
In less than two months, the S&P 500 dropped 14%, largely due to recently materialized trade war fears. The Dow Jones Industrial Average and the tech-heavy Nasdaq have suffered similar losses, combined with increased volatility in global equity markets.
Historically, such risk aversion leads to investors moving money into Treasury notes. On the contrary, investors have aggressively dumped Treasury notes since last Friday, driving yields higher while the dollar index crashed. The U.S. dollar index (DXY) plunged to 99.705, the lowest level recorded thus far this month of April.
Typically, currencies appreciate when their national bond yields rise, except when markets are worried about a country’s debt situation. If this is the case, investors move money from the bond markets, leading to rising yields and a concurrent currency depreciation. The Global South witnessed this situation in 2018.
Bitcoin’s Rising Influence
Bitcoin is gaining more attention following its move over the $81,000 mark after much battle at $77,000 range.
As featured in our recent coverage, whale wallets rapidly accumulate BTC, signaling strong institutional confidence. Recent data from CryptoQuant showed a huge spike in Bitcoin wallets containing between 1,000 and 10,000 BTC.
BTC price was trading at $82,025 at press time, demonstrating a 3.82% increase over the last 24 hours. On-chain analysts have also disclosed that Bitcoin is primed for further rally as it eyes $88,800.
The optimistic sentiments in the BTC market have sparked excitement among traders and investors. Still, some quarters are raising concerns about Bitcoin’s dominance.
In a recent update we covered, New York Attorney General James warned that Bitcoin could undermine U.S. dollar dominance. She, therefore, called for a swift and comprehensive federal regulation of digital assets in what might appear as a pro-crypto Federal government era.
