Bitcoin’s price volatility has noticeably increased in the past two months, indicating a likely resurgence of options-driven trading dynamics that lead to significant market fluctuations in either direction.

Bitcoin’s implied volatility peaked at 80% after the launch of Bitcoin ETFs in the U.S., as noted by Jeff Park, a market analyst at Bitwise. However, recent statistics show it approaching 60.

Historical BTC volatility levels show large spikes before Bitcoin exchange-traded funds were approved for US markets in 2024. Source: Jeff Park

Park highlighted a similar surge in Bitcoin’s price at the beginning of 2021, which initiated a bull run leading to a peak of $69,000 in November. 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.”

This observation challenges the view that ETFs and institutional investments have permanently stabilized Bitcoin’s price volatility, suggesting that market structures may be shifting back towards a more dynamic state.

Rising Volatility Amid Market Challenges

The current heightened volatility in Bitcoin aligns with trends witnessed across various asset classes, asserts Richard Teng, CEO of Binance.

Amid fears of a sustained downturn, Bitcoin recently fell below $85,000, raising concerns about additional declines and potentially marking the onset of a new bear market.

Analysts speculate various factors contributing to this downturn, such as high leverage in derivatives and BTC long-term holders selling off their assets, alongside broader economic influences.

Despite the ongoing challenges, experts maintain that Bitcoin’s long-term fundamentals, price appreciation potential, and institutional acceptance trends remain intact.