Bitcoin’s bull runs have changed drastically, moving away from the past adrenaline-pumping rallies characterized by wild price swings that kept traders on edge. The current trend shows prices climbing steadily, much like the traditional bull runs seen in stock markets.

For instance, since November of last year, bitcoin’s price has surged from around $70,000 to a record high of over $118,000 as of now, marking a 68% rally. This upward movement has been accompanied by a consistent decrease in both realized and expected volatility, which represents a departure from the usual positive correlation between spot prices and volatility observed in the past.

This development brings bitcoin more in line with Wall Street, where the VIX index, known as the fear gauge, tends to decrease during bull markets. According to Cole Kennelly, the founder and CEO of Volmex Labs, bitcoin’s increasing prices amidst decreasing implied volatility suggest a shift towards traditional financial market behavior as the crypto sector matures.

The positive correlation between spot prices and volatility seems to have come to an end, mainly due to institutional adoption. Key volatility indicators have started to detach from the rising bitcoin price, indicating a sign of market maturity.

In late 2024, Volmex Finance’s BVIV, measuring the annualized 30-day implied volatility from bitcoin options, remained between 60% and 70% as bitcoin climbed from $70,000 to $100,000. However, since January, the index has been trending downwards, reaching around 40% currently, the lowest level since October 2023.

Deribit’s DVOL, which also represents the 30-day implied volatility, previously showed a positive correlation with BTC since early 2023. However, with the influx of sophisticated players in the market, this correlation has diminished. Pulkit Goyal, the Head of Trading at Orbit Markets, attributes this change to the nature of the current rally, which has been more orderly and driven by institutional flows rather than retail.

Overall, the subdued volatility in the bitcoin market can be attributed to institutional strategies like writing covered calls to generate extra yield on bitcoin holdings or through bitcoin-linked ETFs. The demand for options plays a significant role in influencing implied volatility, with market makers and dealers also contributing to lower volatility.

Looking ahead, the trend of rising prices coupled with low volatility may continue, supported by macroeconomic factors like a weakening U.S. dollar and expectations of rate cuts. However, any unforeseen event could cause bitcoin’s volatility to spike suddenly, just like in the equity markets.

While the market seems to be on a slow and steady ascent for now, driven by macro trends rather than speculation, unexpected triggers could potentially disrupt this pattern.