Bitcoin Goes Mainstream: IBIT Volatility Drops to SPY Levels
- Market swings in BlackRock’s $75B spot Bitcoin fund are moderating to those of stock levels: Bloomberg.
- IBIT still remains twice as volatile as gold ETF GLD.
Bitcoin is shedding its punk status and moving into the mainstream, based on moderating price swings in the world’s biggest spot Bitcoin ETF—the $74.7 billion iShares Bitcoin Trust (IBIT).
IBIT is now about as volatile as the $625 billion SPDR S&P 500 ETF Trust (SPY), meaning it swings about the same as stocks, according to Bloomberg Intelligence Senior Analyst Eric Balchunas. A year ago it was 5.7 times more volatile, he said in a post on X.
IBIT Brings Bitcoin Mainstream
Bitcoin’s diminishing volatility is key to it becoming a widely accepted asset since its wild price swings in years past have kept it out of many mainstream investing portfolios. The January 2024 launch of IBIT, along with 10 other ETFs tracking the cryptocurrency’s spot price issued by big asset managers like Fidelity, have helped legitimize the digital currency.
Mainstream acceptance has been helped along by President Donald Trump, who said he wants the U.S. to be the center of the world’s crypto industry. Trump has created a U.S. Bitcoin reserve, named crypto advocate Paul Atkins to chair the SEC and, yesterday, steps were taken so that the nation’s big mortgage finance firms, Fannie Mae and Freddie Mac, would consider home buyers’ crypto investments when evaluating their creditworthiness.
“This shows the mainstream ‘financialization’ of Bitcoin,” Balchunas said in an interview. “The more stable, the lower the volatility, the more that larger serious institutional investors will get interested.”
IBIT vs. SPY Volatility—Source: Bloomberg Intelligence
IBIT launched in January 2024 with 10 other spot Bitcoin ETFs and has gone on to become the fastest-growing exchange-traded fund yet, pulling in a net $51.7 billion of flows. Last July, barely six months after its launch, BlackRock noted that the fund’s volatility was similar to that of giant tech stocks like Nvidia Corp. (NVDA), Tesla Inc. (TSLA) and Meta Platforms Inc. (FB).
Still, IBIT’s volatility is double that of the $101.7 billion SPDR Gold Trust (GLD), Balchunas said. Bitcoin is increasingly seen as an inflation hedge, and some say a more appropriate comparison is to gold.
“They are competing for the same space in the portfolio,” he said.
