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Bitcoin has a well-earned reputation as a volatile asset that has historically doubled or halved in a matter of months. That may be changing.

Bitcoin's 30-day realized volatility, currently 42%, has remained below 50% this month, according to TradingView data. Compare that with South Korea's benchmark Kospi stock index, whose market capitalization is about twice the largest cryptocurrency's, which hit 74% last week and is still around 51%. Another more volatile equity market is Pakistan, whose KSE 100 index is also around 51%.

Bitcoin’s volatility — a measure of how wildly prices have swung — has steadily declined in recent years, particularly since the introduction of spot ETFs in the U.S. in January 2024. These investment vehicles have increased institutional participation, bringing in more risk-managed capital flows that have helped dampen price swings.

The relative stability underscores its appeal as a geopolitical hedge, holding its value when macro forces like wars wreak havoc on traditional assets. $BTChas historically outperformed gold, the S&P 500 and other traditional assets during wars, as River, a bitcoin-only financial institution, pointed out early this month.

Still, most major regional markets and their global counterparts exhibited less volatility than $BTCin the period. Which raises the question: Why makes South Korea, the world's 14th-largest economy, different?

Korean issues

The higher volatility in Korean stocks reflects, to a great extent, the gyrations in the cost of fossil fuel, which doesn't really apply to bitcoin.

The Kospi fell from 6,340 points in late February to 5,000 by the end of March, before rebounding to record highs above 6,380 points.

The initial selloff occurred in the run-up to the war between Iran and the U.S.-Israeli coalition, which started Feb. 28, eventually leading to a closure of the Strait of Hormuz, a major oil supply route. This disruption and the resulting spike in oil prices hurt South Korea because the country imports nearly all its fossil fuels, including oil and natural gas from the Middle East.

Later, the index found its footing as the conflict eased and the two sides negotiated a temporary ceasefire, which is set to expire on Wednesday. Pakistan's stock market saw similar swings, with its economy equally, if not more, exposed to energy market disruptions.

Throughout this time, bitcoin held relatively steady, trading mostly between $65,000 and $75,000, supported by renewed inflows into the U.S.-listed spot exchange-traded funds (ETFs).

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