U.S. Market Turmoil Flips the Volatility Script as Investors Turn to Alternatives
A sharp reversal is underway in financial markets as investors retreat from U.S. assets, pushing Treasury yields higher and dragging down both the dollar and equities—ironically, making the S&P 500 more volatile than bitcoin.
For years, Wall Street’s favorite critique of bitcoin (BTC) was its wild price swings. But in a dramatic turn, that narrative is shifting. Since President Donald Trump’s sweeping tariff policy, dubbed “Liberation Day,” was announced on April 2, the traditional equity benchmark S&P 500 has seen its seven-day realized volatility explode from 50% to 169%—the highest since the pandemic-fueled crash in 2020, according to TradingView data.
While BTC’s short-term volatility has also risen, doubling to 83%, it still trails the S&P 500 by a wide margin. On a 30-day basis, bitcoin now appears even more stable than equities, hinting at a new role as a potential low-beta hedge in turbulent markets.
“The equity markets have become more volatile than Bitcoin, which is actually stabilizing. That raises the question—do you trust politically sensitive assets, or a decentralized, algorithm-driven store of value?” said James Butterfill, Head of Research at CoinShares.
Exodus From U.S. Assets
The flight from U.S. financial instruments has intensified over the past week. The S&P 500 has plummeted 14% in under two months, with tech-heavy indexes like the Nasdaq and Dow Jones suffering similar declines amid escalating trade tensions.
Unlike typical periods of risk aversion, where investors pour into Treasurys and the dollar as safe havens, both are now under pressure. Since last Friday, yields on 10-year U.S. bonds have jumped 62 basis points to 4.45%, while the dollar index (DXY) has dropped to 100—its lowest point since September 2024.
This decoupling of rising yields and a weakening currency is usually associated with emerging markets experiencing debt concerns. “We’re seeing behavior typical of emerging markets—higher yields and a falling currency,” said analysts at Evercore ISI, citing similar patterns in the U.K. during the 2022 Truss crisis.
“There have only been four instances in the past 30 years where the dollar fell more than 1.5% while 30-year yields rose more than 10 basis points,” Evercore noted, adding that the current episode reflects “evaporating U.S. growth exceptionalism” and reduced global appetite for dollar assets amid erratic policymaking.
As political risk and uncertainty climb, bitcoin’s relative calm could be reshaping its reputation—from volatile outsider to a resilient alternative in an increasingly unstable world of traditional finance.
