How Does Increased Institutional Liquidity Impact the Volatility of Major Cryptocurrencies?

Increased institutional liquidity generally tends to decrease the volatility of major cryptocurrencies over time. Larger capital pools provide greater market depth, meaning a single large trade has a proportionally smaller impact on price.

This stabilizes price movements. However, in times of market stress, institutional capital can also lead to synchronized, large-scale sell-offs, temporarily spiking volatility due to efficient, mass liquidation.