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Bitcoin and Ethereum: A Surprising Drop in Volatility

Bitcoin and Ethereum, renowned for their infamous price fluctuations, are currently undergoing an unforeseen phase of diminished volatility. Even more surprising is that they are now less volatile than a commodity as traditional as oil.

According to recent research by Kaiko, the 90-day volatility indexes for Bitcoin and Ethereum have plummeted to multi-year lows, declining by 35% and 37%, respectively. This significant decrease in volatility means that these leading cryptocurrencies are exhibiting less price turbulence than oil, which currently maintains a 41% volatility rate.

Understanding Volatility

Volatility is a crucial metric within financial markets, gauging both the frequency and scale of price shifts during a specified timeframe. Historically, cryptocurrencies have been characterized by more frequent price fluctuations than traditional assets like oil.

However, the recent shift in volatility dynamics has raised eyebrows. Despite being a long-standing symbol of market turbulence, oil has seen its volatility rate decrease from a high of 63% in July 2022. Several factors may contribute to this decline in oil volatility, including increased geopolitical tensions and China’s somewhat lackluster economic recovery following the easing of COVID-19 restrictions.

Liquidity and Trade Volume

Kaiko’s research also sheds light on another aspect affecting the volatility of Bitcoin and Ethereum: liquidity and trade volume. Both cryptocurrencies are currently experiencing multi-year lows in these metrics, which can contribute to their decreased price swings. Reduced liquidity and trading activity often translate to less dramatic price fluctuations.

The ETF Factor

While the current trend is towards reduced volatility for Bitcoin and Ethereum, the crypto market remains highly dynamic. One potential catalyst for increased volatility could be the launch of an exchange-traded fund (ETF) for Bitcoin. This possibility gained credibility with BlackRock’s unexpected ETF application, given the firm’s successful track record in this area. The actions of other applicants following BlackRock’s move further heightened expectations regarding the ETF’s potential impact on the market.


In summary, cryptocurrencies remain in a state of perpetual evolution, and the recent decline in Bitcoin and Ethereum’s volatility has reversed the roles, positioning them as less tumultuous than the traditionally stable oil market. However, with the possibility of a Bitcoin ETF on the horizon, the crypto landscape remains ripe for unexpected twists and turns. Investors and observers will closely monitor how these dynamics continue to evolve in the coming months.

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