The recent turbulence in global markets has shed light on an intriguing phenomenon: the S&P 500 Index exhibited volatility levels akin to those typically associated with Bitcoin. Following U.S. President Donald Trump’s “Liberation Day” tariff announcement on April 2, the volatility of the S&P 500, measured by the “SPY US Equity Hist Vol” chart, soared to 74, surpassing Bitcoin’s volatility level of 71. This development signals a stark departure from the S&P 500’s long-term volatility average, which generally hovers below 20.
As a financial asset, Bitcoin has always thrived in high volatility conditions, frequently experiencing price swings greater than traditional assets. According to BlackRock, Bitcoin’s volatility remains exceptionally high—around 3.9 and 4.6 times that of gold and global equities, respectively. This sustained volatility has been a characteristic of Bitcoin since its inception, while traditional markets are now grappling with what can only be described as crisis-level volatility as a result of the ongoing trade war.
President Trump’s tariffs, threatening duties ranging from 10% to 50% on imports from the nation’s largest trading partners, have instigated panic and fear in financial markets. Although some tariffs were paused for 90 days, the administration has ramped up duties particularly on Chinese imports, resulting in a significant sell-off in various asset classes, including U.S. Treasuries. The yield on the 10-year Treasury bond is experiencing its steepest rise since 2001, further amplifying market concerns.
Macro Relief and Bitcoin’s Stagnation
Despite a historic relief rally in U.S. equity markets on April 9, following the tariff pause, this “macro relief” did not extend to Bitcoin or its spot exchange-traded funds (ETFs). Analysts from Bitfinex noted that institutional confidence appears cautious, with ETF demand cooling off after January’s record inflows. This hesitancy suggests that large investors are waiting for more favorable market conditions or clearer regulatory guidance before committing additional capital.
Interestingly, the second quarter of 2025 may hold promise for Bitcoin, especially as new narratives such as sovereign accumulation and the growth of real-world asset tokenization begin to emerge. Joe Burnett, director of market research at Unchained, believes that Bitcoin presents attractive long-term investment characteristics for those concerned about government policies impacting their portfolios.
The recent volatility spike in the S&P 500 challenges the long-held perception that traditional markets are inherently safer and more stable than alternatives like Bitcoin. This newfound equivalence in volatility might prompt investors to reconsider their strategies and assess the risks associated with both asset classes.
As markets continue to react to policy changes and global events, one thing remains clear: the dynamics between traditional financial assets and cryptocurrencies like Bitcoin are evolving in ways we previously might not have anticipated. Investors must remain vigilant and adaptive as they navigate this increasingly complex landscape.
