Bitcoin is undergoing a quiet transformation—one that’s reshaping how institutional investors view the world’s first cryptocurrency. The signs are clear: volatility in the iShares Bitcoin Trust (IBIT), the largest spot Bitcoin ETF with over $74.7 billion in assets, has declined sharply and now mirrors the price swings of traditional stock market benchmarks like the SPDR S&P 500 ETF Trust (SPY).
According to Bloomberg Intelligence Senior Analyst Eric Balchunas, IBIT’s volatility has dropped so significantly that it now moves in line with broad-market equities. This marks a pivotal shift from just a year ago, when Bitcoin’s price swings were 5.7 times more volatile than those of SPY. The convergence suggests Bitcoin is no longer an outlier asset but is increasingly behaving like a mature financial instrument.
👉 Discover how Bitcoin is evolving into a stable investment asset—just like stocks.
The Financialization of Bitcoin
The term “financialization” refers to the process by which an asset becomes integrated into mainstream financial systems, adopted by institutional investors, and treated as a legitimate component of diversified portfolios. Bitcoin’s journey toward this status has accelerated dramatically since January 2024, when the U.S. Securities and Exchange Commission approved the first wave of spot Bitcoin ETFs, including IBIT by BlackRock.
These ETFs allow traditional investors to gain exposure to Bitcoin without holding the underlying digital asset—removing barriers related to custody, security, and technical complexity. As a result, billions have flowed into these funds, with IBIT alone attracting $51.7 billion in net inflows within its first year, making it the fastest-growing ETF in history.
“This shows the mainstream ‘financialization’ of Bitcoin,” Balchunas noted in a recent interview. “The more stable, the lower the volatility, the more that larger serious institutional investors will get interested.”
Lower volatility reduces risk perception, making Bitcoin more palatable for pension funds, endowments, and other conservative institutions that previously avoided crypto due to its reputation for extreme price swings.
Comparing Volatility Across Asset Classes
To understand Bitcoin’s maturation, it helps to compare its risk profile with other major asset classes:
- IBIT vs. SPY: As of mid-2025, the 30-day volatility of IBIT has converged with that of SPY—the largest ETF tracking the S&P 500. This means Bitcoin’s price movements are now roughly on par with those of large-cap U.S. equities.
- IBIT vs. GLD: Despite this progress, Bitcoin remains twice as volatile as the SPDR Gold Trust (GLD), a $101.7 billion gold-backed ETF. Gold has long been considered a safe-haven asset and a hedge against inflation.
While some investors view Bitcoin as “digital gold,” the data shows it hasn’t yet reached gold’s level of stability. However, the narrowing gap suggests Bitcoin is moving in that direction.
“They are competing for the same space in the portfolio,” Balchunas said, referring to Bitcoin and gold. Both are increasingly seen as long-term stores of value and inflation hedges—especially in an era of rising national debts and monetary expansion.
Institutional Adoption Accelerates
The launch of spot Bitcoin ETFs was a watershed moment for crypto adoption. Before 2024, most institutional access to Bitcoin came through futures contracts or private trusts like Grayscale’s GBTC—products often criticized for premiums, limited liquidity, or structural inefficiencies.
Now, with regulated, exchange-traded vehicles like IBIT available through standard brokerage accounts, adoption has surged among:
- Wealth managers
- Retirement plan providers
- Insurance companies
- Family offices
Even traditional financial infrastructure is adapting. Recent policy developments have signaled growing acceptance of crypto in mainstream finance. For instance, steps have been taken to allow major U.S. mortgage firms—Fannie Mae and Freddie Mac—to consider crypto holdings when evaluating a borrower’s net worth and creditworthiness.
This integration into core financial services further legitimizes Bitcoin as a recognized asset class.
👉 See how financial institutions are starting to treat Bitcoin like traditional assets.
Why Lower Volatility Matters
Volatility isn’t just a number—it shapes investor behavior and portfolio strategy.
High volatility deters risk-averse investors and increases the cost of capital. It also complicates hedging strategies and makes asset allocation decisions more difficult.
By contrast, lower volatility enables:
- Smaller drawdowns during market stress
- More predictable returns over time
- Greater inclusion in model portfolios
- Easier integration with risk management frameworks
For asset allocators at large institutions, seeing IBIT’s volatility align with SPY is a psychological milestone. It suggests Bitcoin can be treated not as speculative tech play, but as a strategic holding—similar to equities or even commodities.
What’s Next for Bitcoin ETFs?
With volatility declining and inflows strong, the next phase may involve broader product innovation. We could see:
- Bitcoin yield-bearing ETFs (e.g., staking or lending-linked products)
- Actively managed crypto strategies
- Multi-asset digital asset funds combining BTC, ETH, and tokenized real-world assets
Regulatory clarity will remain key. But as long as spot ETFs continue performing reliably and transparently, adoption is likely to deepen across both retail and institutional markets.
Frequently Asked Questions (FAQ)
Q: What does it mean that IBIT’s volatility is similar to SPY?
A: It means that day-to-day price movements in the iShares Bitcoin Trust are now about as large and predictable as those in the S&P 500 ETF—indicating greater market maturity and reduced risk.
Q: Is Bitcoin still riskier than gold?
A: Yes. While Bitcoin has become more stable, it remains approximately twice as volatile as gold (as measured by GLD), meaning it carries higher short-term risk.
Q: How do spot Bitcoin ETFs make investing easier?
A: They allow investors to buy shares in a regulated fund that directly holds Bitcoin, eliminating the need to manage private keys or use crypto exchanges.
Q: Can I hold IBIT in my retirement account?
A: Yes. Most major brokerages now offer spot Bitcoin ETFs like IBIT in IRAs and other tax-advantaged retirement accounts.
Q: Does lower volatility mean higher prices ahead?
A: Not necessarily. Lower volatility reflects stability, not price direction. However, it often precedes increased institutional buying, which can support long-term price appreciation.
Q: Are all Bitcoin ETFs equally volatile?
A: Most follow similar patterns, but slight differences exist due to management fees, trading volume, and creation/redemption efficiency. IBIT tends to be among the most liquid and closely tracked.
👉 Explore regulated Bitcoin investment options that fit modern portfolios.
Conclusion
Bitcoin is no longer on the financial fringe. With volatility levels matching those of major stock ETFs like SPY and growing acceptance across institutional and regulatory channels, it is being reclassified—not just as technology or speculation—but as a legitimate component of diversified investment strategies.
While it still has further to go to match the stability of gold or bonds, its trajectory is unmistakable. The era of Bitcoin as a volatile outsider is fading. In its place emerges a new chapter: Bitcoin as infrastructure—a foundational digital asset embedded in the global financial system.
Core Keywords: Bitcoin ETF, IBIT, volatility, SPY, institutional adoption, financialization, crypto investment, spot Bitcoin