Stock Market Volatility Surpasses Bitcoin’s as Markets Whipsaw

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In Brief
  • The S&P 500's 30-day volatility surpassed Bitcoin's 30-day average for the first time ever.

  • Market fears have driven massive swings in the normally stable index.

  • Investors face uncertain times, with bailouts and coronavirus fears increasing.

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The stock markets whipsawed back and forth last week as traders evaluated the overall damage from the COVID-19 pandemic. Substantial swings, both positive and negative, have left many without the ability to predict what is in store.

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The Dow Jones Industrial Average dropped more than 900 points on Friday. [CNBC] In other times, this would have been a massive decline. However, with the fallout continuing, the drop appears relatively mild.

Nevertheless, the drop wasn’t enough to send stocks negative for the week as a whole. The Dow posted a strong 12.8% gain overall, even with the declines on Friday. This movement indicates that the market was substantially oversold at the beginning of the week.

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Uncertainties remain

While the market posted gains for the week, much of the underlying economic situation remains the same. According to Maneesh Deshpande, Barclays’ chief U.S. equity strategist:

“We believe medium-term risks are skewed to the downside after this rally. Two other uncertainties facing investors (the length of the economic quarantine required to contain the virus and the ultimate economic damage) remain unresolved.”

The markets continue to fluctuate due to the rapid movement of news during the pandemic cycle. With the global economy effectively on shutdown, businesses, including retailers, are being forced to grapple with major decisions without insight.

Volatility explosion

With all the unforeseen economic news, the markets have become wildly volatile. For the first time ever, the S&P 500’s 30-day volatility surpassed the 30-day historic average for Bitcoin, as pointed out by @yassineARK on Twitter.

The move indicates just how wild the markets have become. Bitcoin has been notoriously volatile, with substantial swings being par for the course. The S&P 500 has traditionally been a relatively stable index but is now dealing with the dramatic effects of the economic shutdown.

Bitcoin stability?

As the markets have responded, Bitcoin has remained relatively stable over the past week. This statistic represents a short-term evaluation, given the staggering declines that occurred on March 12.

Nevertheless, the market’s willingness to step in Bitcoin has remained. This may be largely due to the lack of clarity on the impact of the newly-minted $2 trillion stimulus package. Widespread hyperinflation could leave consumers with nothing to show for their troubles, depending on the impact of the bailouts.

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With a background in science and writing, Jon's cryptophile days started in 2011 when he first heard about Bitcoin. Since then he's been learning, investing, and writing about cryptocurrencies and blockchain technology for some of the biggest publications and ICOs in the industry. After a brief stint in India, he and his family live in southern CA.

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