CORRECTION (March 28, 15:51 UTC): Due to a data calculation error, an earlier version of this story overstated the S&P 500’s volatility in the days since March 12. It has risen, but not above 80 percent.

In a role reversal befitting these topsy-turvy times, Wall Street has recently seen more turbulence than the average for the top cryptocurrency.

The S&P 500’s 30-day volatility of daily returns, or historical volatility, jumped to nearly 80 percent Wednesday, according to data from the Federal Reserve Bank of St. Louis.

Meanwhile, bitcoin’s (BTC) volatility gauge stood at 138 percent on Wednesday compared to the average volatility of 65 percent seen in the March 2019-February 2019 period, as per CoinDesk’s Bitcoin Price Index

The 30-day volatility of daily returns calculates the standard deviation of the daily gain or loss from each of the past 30 trading days and is usually expressed in annual terms irrespective of the time period. 

See also: Miners Are Selling More Bitcoin Than They Are Mining

Put simply, it gauges fluctuations from the mean but does not measure the direction. So, when we say that the S&P 500’s volatility reading has surpassed bitcoin’s average, it means the cryptocurrency on average witnesses smaller deviations from the mean compared to what the equity index has seen over the last 30 days.

Bitcoin volatility and average volatility and S&P 500 index volatility, charted vs. time
Bitcoin volatility and average volatility and S&P 500 index volatility, charted vs. time

The S&P 500’s volatility began rising in the first week of March as the coronavirus outbreak outside China gathered pace, stoking fears of a global recession. 

The situation worsened in the second and third week, as the persistent sell-off in stocks triggered margin calls, forcing investors to treat traditional safe-haven assets like gold and U.S. Treasurys as sources of liquidity. 

That further boosted uncertainty and added to the price volatility – so much so that 4 to 5 percent daily moves have become a new normal. 

In fact, the volatility in the equity market recently rose above the lifetime average of bitcoin’s 30-day volatility, as pointed out by ARK Investment Management’s crypto-asset analyst Yassine Elmandjra. So by this one measure the benchmark equity index has become a relatively risky asset. 

Of course, bitcoin, too, has witnessed its fair share of price volatility with institutions exiting the market amid a global dash for cash and price drops getting exaggerated due to forced long liquidations on derivative exchange BitMEX. The situation, however, has been somewhat better lately compared to Wall Street in terms of volatility.  

See also: Bitcoin Halving 2020, Explained

The cryptocurrency’s 30-day volatility hovered below its 12-month average of 65 percent in the first 11 days of the month. However, on March 12, prices fell by a staggering 39 percent from $7,950 to $4,777 and printed lows under $4,000 on the following day. 

With the sudden price crash, the 30-day volatility jumped to 106 percent on Mach 12 and has remained elevated ever since, despite the price recovery and relative stability in the $6,500 to $7,000 range observed this week. 

Looking forward, the volatility in stock markets may subside, as the central banks and governments across the world have launched monetary and fiscal lifelines to contain the economic fallout from the virus outbreak. 

The Federal Reserve has cut rates to zero and announced an open-ended asset purchase program. Meanwhile, the U.S. Senate approved a $2 trillion fiscal stimulus plan this week. 

A potential decline in the stock market volatility could conceivably also tame volatility in the bitcoin market. That said, the next halving of miners’ rewards is due in May. As a result, bitcoin could again return to its traditional status as a more risky asset than stocks. 

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