Bitcoin's recent market volatility has drawn significant attention. While it was widely believed that ETFs had tamed Bitcoin's volatility, data from the past 60 days shows its implied volatility (IV) has experienced its first notable rise in 2025. Interestingly, volatility continued to climb even during price declines, potentially signaling a return to pre-ETF volatility regimes.

Shift in Volatility Trend

The Bitcoin Volatility Index recently rose to around 125. The typical positive correlation between implied volatility and price action has broken down, suggesting the market might be entering a new volatility cycle.

Historical Volatility Peaks

Over the past five years, Bitcoin's implied volatility spiked above 80% during major events like the 2021 mining crackdown, the May 2022 Luna/UST collapse, and the November 2022 FTX crash. However, it remained consistently below this level after the ETF launch until the recent breakout.

Options Positioning Analysis

Data from Deribit shows a substantial $720 million in open interest for out-of-the-money call options expiring in December, such as those with a $200,000 strike price. This indicates that large holders ("whales") are positioning for significant price movements by year-end.

Market Impact and Outlook

Rising volatility could attract more investors to participate via options. If volatility continues to climb alongside falling prices, it might foreshadow a sharp rebound. Conversely, if volatility stalls, the risk of a sustained bearish trend increases.

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Summary

*Source: Jeff Park, Bitwise Advisor

Compiled by: Moni, Odaily Star Daily*

In just six weeks, Bitcoin lost $500 billion in market capitalization. ETF outflows, the Coinbase discount, structural selling, and the liquidation of poorly positioned long holdings occurred without any clear catalyst for a rebound. Persistent concerns—including whale selling, loss-stricken market makers, a lack of defensive liquidity, and existential threats like the "quantum crisis"—remain obstacles to a rapid recovery. Yet, one question has persistently troubled the community throughout this decline: What exactly is happening with Bitcoin's volatility?

The mechanics of Bitcoin's volatility have quietly shifted.

For the past two years, the consensus was that ETFs had "tamed" Bitcoin, suppressing its volatility and transforming it from a macro-sensitive asset into an institutionally-regulated instrument with dampened volatility mechanisms. But focusing on the last 60 days reveals a different story; the market appears to have reverted to its old, volatile self.

Reviewing Bitcoin's implied volatility over the last five years reveals distinct peaks:

* The first (and highest) peak occurred in May 2021, reaching 156% during the mining crackdown.

* The second peak hit 114% in May 2022, triggered by the Luna/UST collapse.

* The third peak happened between June and July 2022 during the 3AC liquidation.

* The fourth peak was in November 2022 with the FTX collapse.

Since then, Bitcoin's volatility never exceeded 80%. The closest it came was in March 2024, following three months of sustained inflows into spot Bitcoin ETFs.

A clearer pattern emerges from the Bitcoin vol-of-vol index (which measures the rate of change of volatility itself). Historically, this index spiked to around 230 during the FTX collapse. However, since the ETF approval in early 2024, it never breached 100, and implied volatility remained low and disconnected from spot price action. Essentially, Bitcoin seemed to have lost the high-volatility behavior characteristic of its pre-ETF market structure.

But things changed over the past 60 days, marking the first rise in Bitcoin volatility in 2025.

Tracking recent movements, there was a brief window where the spot Bitcoin Volatility Index climbed near 125 while implied volatility was also rising. This initially hinted at a potential breakout, as volatility had previously correlated positively with spot price. However, the anticipated price surge didn't materialize; instead, the market reversed downward.

More intriguingly, Implied Volatility (IV) continued to rise even as the spot price fell. This phenomenon—falling prices coupled with rising IV—has been rare in the ETF era. This could signify another critical "inflection point" for Bitcoin's volatility patterns, potentially reverting to pre-ETF conditions.

Analyzing the Skew

To better understand this trend, let's analyze the skew chart. During sharp market declines, put skew typically spikes rapidly—reaching -25% during the three major events mentioned earlier.

However, the most notable data point isn't from a downturn but from January 2021. Call skew peaked above +50% during Bitcoin's last true "mega gamma squeeze." The price skyrocketed from $20,000 to $40,000, breaking the 2017 all-time high. This surge attracted trend followers, CTAs, and momentum funds, causing realized volatility to explode. Traders were forced to buy spot/futures to hedge short gamma exposure, further fueling the price rally. This period also saw record retail inflows into Deribit as traders discovered the power of out-of-the-money call options.

This analysis highlights the importance of monitoring options positioning. Ultimately, it is options positioning—not just spot trading—that often creates the decisive moves propelling Bitcoin to new highs.

With Bitcoin's volatility trend potentially at another inflection point, prices might once again be driven by options. If this shift persists, the next major Bitcoin rally may stem not only from ETF inflows but also from a volatile market attracting more investors seeking to profit from that volatility, as the market finally recognizes Bitcoin's true potential.

Significant Open Interest

As of November 22, 2025, the top five USD-denominated open interest contracts on Deribit were:

1. $85,000 Put expiring Dec 26, 2025: $1.0 Billion OI

2. $140,000 Call expiring Dec 26, 2025: $950 Million OI

3. $200,000 Call expiring Dec 26, 2025: $720 Million OI

4. $80,000 Put expiring Nov 28, 2025: $660 Million OI

5. $125,000 Call expiring Dec 26, 2025: $620 Million OI

This shows significantly more positioning in calls (by notional value) heading into year-end, with strikes skewed far out-of-the-money.

The Volatility Machine

Observing the 2-year Bitcoin Implied Volatility chart reveals that the sustained demand for volatility over the past two months most closely resembles the pattern seen between February and March 2024. Many will recall this as the period of explosive growth driven by ETF inflows. In other words, Wall Street needs high Bitcoin volatility to attract more investor participation. Wall Street is a trend-following business, keen on maximizing profits before year-end bonuses are paid.

Volatility acts like a spontaneous engine of interest.

Of course, it's premature to confirm if volatility has decisively broken out or if ETF flows will follow suit—spot prices could continue to decline. However, if the spot price declines further from current levels while Implied Volatility (IV) continues to climb, it would strongly indicate the potential for a significant price rebound, especially in a "sticky" options environment where traders remain inclined to go long volatility. Conversely, if selling pressure persists while volatility stalls or declines, the path out of the downturn narrows considerably, particularly given the negative externalities from recent structural selling. In that scenario, the market would be less about finding a bounce and more about potentially cementing a bearish trend.

Bitcoin's recent market volatility has drawn significant attention. While it was widely believed that ETFs had tamed Bitcoin's volatility, data from the past 60 days shows its implied volatility (IV) has experienced its first notable rise in 2025. Interestingly, volatility continued to climb even during price declines, potentially signaling a return to pre-ETF volatility regimes.

Shift in Volatility Trend

The Bitcoin Volatility Index recently rose to around 125. The typical positive correlation between implied volatility and price action has broken down, suggesting the market might be entering a new volatility cycle.

Historical Volatility Peaks

Over the past five years, Bitcoin's implied volatility spiked above 80% during major events like the 2021 mining crackdown, the May 2022 Luna/UST collapse, and the November 2022 FTX crash. However, it remained consistently below this level after the ETF launch until the recent breakout.

Options Positioning Analysis

Data from Deribit shows a substantial $720 million in open interest for out-of-the-money call options expiring in December, such as those with a $200,000 strike price. This indicates that large holders ("whales") are positioning for significant price movements by year-end.

Market Impact and Outlook

Rising volatility could attract more investors to participate via options. If volatility continues to climb alongside falling prices, it might foreshadow a sharp rebound. Conversely, if volatility stalls, the risk of a sustained bearish trend increases.

---

Summary

*Source: Jeff Park, Bitwise Advisor

Compiled by: Moni, Odaily Star Daily*

In just six weeks, Bitcoin lost $500 billion in market capitalization. ETF outflows, the Coinbase discount, structural selling, and the liquidation of poorly positioned long holdings occurred without any clear catalyst for a rebound. Persistent concerns—including whale selling, loss-stricken market makers, a lack of defensive liquidity, and existential threats like the "quantum crisis"—remain obstacles to a rapid recovery. Yet, one question has persistently troubled the community throughout this decline: What exactly is happening with Bitcoin's volatility?

The mechanics of Bitcoin's volatility have quietly shifted.

For the past two years, the consensus was that ETFs had "tamed" Bitcoin, suppressing its volatility and transforming it from a macro-sensitive asset into an institutionally-regulated instrument with dampened volatility mechanisms. But focusing on the last 60 days reveals a different story; the market appears to have reverted to its old, volatile self.

Reviewing Bitcoin's implied volatility over the last five years reveals distinct peaks:

* The first (and highest) peak occurred in May 2021, reaching 156% during the mining crackdown.

* The second peak hit 114% in May 2022, triggered by the Luna/UST collapse.

* The third peak happened between June and July 2022 during the 3AC liquidation.

* The fourth peak was in November 2022 with the FTX collapse.

Since then, Bitcoin's volatility never exceeded 80%. The closest it came was in March 2024, following three months of sustained inflows into spot Bitcoin ETFs.

A clearer pattern emerges from the Bitcoin vol-of-vol index (which measures the rate of change of volatility itself). Historically, this index spiked to around 230 during the FTX collapse. However, since the ETF approval in early 2024, it never breached 100, and implied volatility remained low and disconnected from spot price action. Essentially, Bitcoin seemed to have lost the high-volatility behavior characteristic of its pre-ETF market structure.

But things changed over the past 60 days, marking the first rise in Bitcoin volatility in 2025.

Tracking recent movements, there was a brief window where the spot Bitcoin Volatility Index climbed near 125 while implied volatility was also rising. This initially hinted at a potential breakout, as volatility had previously correlated positively with spot price. However, the anticipated price surge didn't materialize; instead, the market reversed downward.

More intriguingly, Implied Volatility (IV) continued to rise even as the spot price fell. This phenomenon—falling prices coupled with rising IV—has been rare in the ETF era. This could signify another critical "inflection point" for Bitcoin's volatility patterns, potentially reverting to pre-ETF conditions.

Analyzing the Skew

To better understand this trend, let's analyze the skew chart. During sharp market declines, put skew typically spikes rapidly—reaching -25% during the three major events mentioned earlier.

However, the most notable data point isn't from a downturn but from January 2021. Call skew peaked above +50% during Bitcoin's last true "mega gamma squeeze." The price skyrocketed from $20,000 to $40,000, breaking the 2017 all-time high. This surge attracted trend followers, CTAs, and momentum funds, causing realized volatility to explode. Traders were forced to buy spot/futures to hedge short gamma exposure, further fueling the price rally. This period also saw record retail inflows into Deribit as traders discovered the power of out-of-the-money call options.

This analysis highlights the importance of monitoring options positioning. Ultimately, it is options positioning—not just spot trading—that often creates the decisive moves propelling Bitcoin to new highs.

With Bitcoin's volatility trend potentially at another inflection point, prices might once again be driven by options. If this shift persists, the next major Bitcoin rally may stem not only from ETF inflows but also from a volatile market attracting more investors seeking to profit from that volatility, as the market finally recognizes Bitcoin's true potential.

Significant Open Interest

As of November 22, 2025, the top five USD-denominated open interest contracts on Deribit were:

1. $85,000 Put expiring Dec 26, 2025: $1.0 Billion OI

2. $140,000 Call expiring Dec 26, 2025: $950 Million OI

3. $200,000 Call expiring Dec 26, 2025: $720 Million OI

4. $80,000 Put expiring Nov 28, 2025: $660 Million OI

5. $125,000 Call expiring Dec 26, 2025: $620 Million OI

This shows significantly more positioning in calls (by notional value) heading into year-end, with strikes skewed far out-of-the-money.

The Volatility Machine

Observing the 2-year Bitcoin Implied Volatility chart reveals that the sustained demand for volatility over the past two months most closely resembles the pattern seen between February and March 2024. Many will recall this as the period of explosive growth driven by ETF inflows. In other words, Wall Street needs high Bitcoin volatility to attract more investor participation. Wall Street is a trend-following business, keen on maximizing profits before year-end bonuses are paid.

Volatility acts like a spontaneous engine of interest.

Of course, it's premature to confirm if volatility has decisively broken out or if ETF flows will follow suit—spot prices could continue to decline. However, if the spot price declines further from current levels while Implied Volatility (IV) continues to climb, it would strongly indicate the potential for a significant price rebound, especially in a "sticky" options environment where traders remain inclined to go long volatility. Conversely, if selling pressure persists while volatility stalls or declines, the path out of the downturn narrows considerably, particularly given the negative externalities from recent structural selling. In that scenario, the market would be less about finding a bounce and more about potentially cementing a bearish trend.