Bitcoin Volatility Declines To 40% In 2024 Amid Institutional Surge: Kaiko

Bitcoin’s recent performance has been choppy and has shown considerable volatility, but its overall performance suggests that the digital asset environment is maturing. According to a recent weekly report: Report by SilkwormBTC had a rollercoaster week, briefly breaching the $70,000 milestone before stabilizing around $66,600 by the end of the week.

Bitcoin experienced a modest decline of over 4% this week, mainly due to increased selling on major platforms such as Binance and Bybit. The total trading volume difference between the top BTC pairs was over $518 million, highlighting the ongoing market trends that are impacting Bitcoin price fluctuations.

Amid a storm of price fluctuations, BTC’s decline in volatility in 2024 stands out as a sign of its maturity as an asset class. Since the beginning of the previous year, 60-day historical volatility has consistently remained below 50%, marking a more stable trend in stark contrast to 2022, when volatility spiked above 100%.

In 2024, BTC recorded a historically low 40% volatility and exhibited price stability during major market events such as the introduction of the Spot BTC ETF in the U.S. This decrease in volatility is partly linked to changes in Bitcoin’s market structure, including increased liquidity during U.S. trading hours and changing investor preferences towards safer investments.

Bitcoin and Institutional Investments

The evolution of Bitcoin’s market dynamics is highlighted by the increasing involvement of institutional investors. BlackRock’s leap to become the world’s top Bitcoin ETF manager, overtaking Grayscale, signals the growing confidence of institutional investors in the digital asset. These advancements will bring liquidity and stability to Bitcoin, mitigating the volatility seen in the past few years.

Beyond Bitcoin, traditional financial institutions are also actively working on tokenization-centric initiatives: Fidelity International, for example, partnered with JP Morgan’s network around tokens. At the same time, meme tokens are gaining attention and seeing a notable increase in liquidity despite their volatile nature.

However, regional disparities remain, with trade activity slowing in the South Korean market after a strong first quarter. The changes reflect broader global market sentiment, influenced by inflation concerns and Federal Reserve policy expectations.

Amid the current changes, it is clear that liquidity is improving across U.S. exchanges. This positive shift is primarily driven by the emergence of spot BTC ETFs and an overall improvement in market depth. Enhanced liquidity will play a key role as the market prepares for a potential decline in trading activity in the upcoming third quarter.

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