Bitcoin’s Price Volatility Surges, Signaling Potential Return to Options-Driven Market Moves
Bitcoin’s price volatility has increased significantly over the last two months, indicating a possible return to options-driven price action that can lead to substantial market movements in both directions. According to Jeff Park, a market analyst and advisor at investment firm Bitwise, Bitcoin’s implied volatility never exceeded 80% after Bitcoin ETFs were approved in the United States. However, a chart shared by Park reveals that Bitcoin’s volatility is now approaching 60%, sparking concerns about the potential for large market swings.
Historical data on BTC volatility levels show significant spikes before Bitcoin exchange-traded funds were approved for US markets in 2024. As Park noted, the last major options-driven melt-up occurred in January 2021, which marked the beginning of the 2021 bull run that took BTC to new all-time highs, reaching a cycle top of $69,000 in November of that year. He stated, “Ultimately, it is options positioning, not just spot flows, that creates the decisive moves that carry Bitcoin to new highs. It’s possible that for the first time in nearly two years, the volatility surface is flickering with early signs that Bitcoin might become option-driven again.”
Rising Volatility Amid Market Carnage Raises Concerns
The increase in volatility is consistent with levels across all asset classes, according to Binance CEO Richard Teng. 
Despite the ongoing downturn, analysts at crypto exchange Bitfinex believe that it is due to short-term factors and signals “tactical rebalancing,” rather than institutional flight or a lack of demand. This does not derail Bitcoin’s long-term fundamentals, price appreciation, or institutional adoption trends, according to the analysts.
