How volatile is Bitcoin?

Bitcoin’s price volatility is reaching similar levels to the US stock market (S&P 500). In 2013, four years after Bitcoin’s launch, the annualized volatility reached an all-time high of 181%, while in 2025, it went as low as 23%.

So, why is volatility falling in 2025?

There is a stark difference between the trading environment around Bitcoin in 2025 and 2013, in terms of adoption rate, the diversity of buyers, and the growing presence of institutional investors we see today, as opposed to the Bitcoin market being exclusively appealing to early believers and retail investors in 2013. 

High adoption and liquidity

Ever since the launch of Bitcoin exchange-traded products (ETPs) in Europe, starting with synthetic Bitcoin ETPs in 2015 and physically backed in 2019, the story of Bitcoin’s adoption and liquidity has changed. 

Wrapping Bitcoin in a familiar, regulated, physically backed investment vehicle has invited institutional investors into the market, deepening its liquidity, providing much-needed simplified access to this controversial asset, otherwise only understood and adopted by the tech-savvy. Moreover, a key element in wrapped Bitcoin ETPs is that daily creation and redemptions are netted by authorized participants, so only the net flow is covered in BTC, reducing slippage and market impact as opposed to buying and selling Bitcoin directly on an exchange. 

Since inception, $2.7 billion has been injected into physically backed Bitcoin ETPs in Europe, now worth more than $8.3 billion.

In January 2024, the US finally got on board, allowing 11 queued issuers to launch Bitcoin exchange-traded funds and attracting over $100 billion in assets under management by December 2024. This milestone had a huge impact on Bitcoin’s adoption rate and level of liquidity, encouraging more markets to enter the space. Most recently, UK retail investors are preparing to gain access to the crypto exchange-traded notes (ETNs) market later in October.

Institutional adoption and deepening liquidity have been absorbing selling pressure and, in turn, lessening Bitcoin’s volatility.

Macro alignment

As the world begins to reach consensus around Bitcoin’s investment case, central banks are also reducing high borrowing costs. In the past few years, the Federal Reserve aggressively raised rates to fight a peak inflation rate that exceeded 5.5% in 2022. 

Although inflation has decreased to 2.9% in August 2025, it is still above the Fed’s 2% target. Cooling inflation and the slowing labor market led the Fed to start cutting interest rates, most recently in September 2025.

Investors around the world appear to be increasingly aligned about Bitcoin’s role as a macro asset, already pricing in what further rate cuts could mean to this emerging store of value. Historically, in prolonged low-rate regimes, Bitcoin’s volatility levels were at their highest. 

Market maturity

Bitcoin is increasingly viewed as a store of value rather than a speculative play. Governments and corporations are accumulating at record levels; companies have increased their Bitcoin holdings by almost 50% since the start of the year. In fact, ETFs, corporations and governments have added more than 6 multiples of the Bitcoin mined in the same time frame, which makes up 3% of the total supply. Here’s a breakdown of the amount of Bitcoin entities have accumulated in 2025 up until September 24:

• ETFs and other funds: +212,608 BTC (+16.5%)
• Corporations (Private + Public): +467,620 BTC (+48.7%)
• Governments: +5,380 BTC (+1.0%)

The risk of volatility increasing will always be present; however, historically, long-term investors have used such drops as opportunities to acquire more Bitcoin at a discount. Volatility would typically increase if unexpected macro shifts take place, such as inflation spikes or Fed policy surprises. Geopolitical conflict has also historically triggered a widespread risk-off environment for markets globally

As Bitcoin matures, its daily price swings have moderated, yet the long-term trend continues to deliver meaningful returns. The structural buying pressure highlighted above explains Bitcoin’s right-skewed distribution, with more upside volatility than downside. Compared with Tesla, which exhibits heavier downside tails, Bitcoin’s profile looks far more favorable. And notably, its right tail rivals that of Nvidia, the world’s largest company by market cap, underscoring that Bitcoin can still generate equity-like upside at a trillion-dollar scale. This helps explain why its risk-adjusted returns remain so robust.