In the past six weeks, Bitcoin has seemed to lose its support, with a market cap evaporating by $500 billion. ETF funds have flowed out, the discount on Coinbase has widened, long positions have been cleared in structural sell-offs, whales have sold off, market makers have incurred losses, and liquidity has dried up, leaving the entire market feeling like it has been locked in a vacuum chamber. There has been no rebound, no saving narrative, and even the sentiment has not reignited. Logically, such a market should push Bitcoin into a complete "standstill," getting colder and colder as it falls.
However, amidst this gloom, an unusual signal has emerged. Volatility is rising. Prices are falling, but volatility is increasing. This is not a minor data anomaly, but a structural change rare enough to make professional traders sit up straight. It suggests that Bitcoin is not in a deep sleep, but is accumulating a "capacity for drastic change." The question suddenly sharpens: with the market falling so badly, why are some people becoming eager for it to "move"?
Over the past two years, ETFs have been seen as a symbol of Bitcoin's maturation, and a consensus has formed: ETFs would suppress volatility, making Bitcoin more like gold, more like a stable institutional asset. Regulation, custody, compliance, and the entry of long-term holders have all been viewed as signals of the arrival of a "low-volatility era," as if Bitcoin's wildly beating heart could finally slow down.
But when we look at the last sixty days, all logic has suddenly reversed. Implied volatility has begun to rise, the volatility index has rebounded from low levels, and while spot prices are declining, options pricing has become increasingly expensive. In the ETF era, there has rarely been a situation where "a falling market drives an increase in volatility," but now, it is happening. This indicates that the so-called "ETFs tame Bitcoin" may just be a collective illusion. ETFs have lowered the participation threshold but have not changed Bitcoin's nature. Bitcoin is not tamed; it has merely been temporarily suppressed. And now, it is starting to return to its familiar path—volatile, uncontrollable, and easily ignited.
Ironically, this rise in volatility is not driven by disaster. Past peaks in volatility were always backed by clear crises, such as mining crackdowns, the Luna collapse, Three Arrows liquidation, and the FTX debacle. These events caused volatility spikes as a result. But now, there are no black swans, no regulatory hammer, no on-chain crises, yet a turning point in volatility has emerged. This means that this time, the volatility is not passive but active. Some are waiting for Bitcoin to swing wildly again, while others need it to tear open a gap in the silence.
To understand this "active volatility," one must look to the options market. In the past two months, the nominal value of open interest in options has been continuously expanding, and the most favored positions are not conservative ones, but out-of-the-money options far from the spot price. They are massive in scale, with astonishing strike price spans, and include both bullish and bearish directions. More importantly, they all point to a common intention—not to bet on direction, but to bet on magnitude. The existence of these positions is like betting on a major earthquake; it doesn't care where the tremor goes, only how big it is.
Historically, Bitcoin's most intense rises were not driven by spot buying but triggered by a chain of hedging from options positions. When Bitcoin surged from $20,000 to $40,000, it was ignited by gamma squeezes from options. That kind of market was not about "someone wanting to buy," but "someone having to buy." The larger the options positions, the more intense the potential forced hedging, and the more exaggerated the price changes could be. And now, this structure is reappearing. Even in skew changes, one can see that the market's expectation for "big moves" is accumulating.
Thus, the question shifts from "why is the market volatile" to "who is most eager for volatility."
Many believe that what drives the market are macro narratives, technical trends, and long-term value. But at this special year-end juncture, what truly drives the market is often the incentive mechanism. Wall Street is entering the most tense period of the year, where fund managers must report annual performance, trading teams must calculate rankings, market makers must cash in on their shares, and bonus mechanisms must begin to settle. A hidden rule in the financial industry is particularly glaring at this time: the direction can be wrong, but volatility cannot be small.
Because in trending markets, people make money from direction. But in choppy markets, people make money from volatility. Performance must look good, reports must be attractive, and bonuses must be realized—all require one condition: the market must move. The stability brought by ETFs does not yield bonuses; only volatility can generate realizable profits from leverage, arbitrage, and options models. Thus, institutions have begun to pursue not trends, but amplitudes. Bitcoin has become the most suitable tool at this juncture. It has sufficient liquidity, an open narrative, extreme sentiment, and, more importantly, it can produce significant price changes in a very short time.
In other words, Bitcoin is becoming Wall Street's year-end bonus engine. Not because it is safer, nor because it is more bullish, but because it is more "dynamic."
The direction of the market in the coming weeks will largely depend on volatility, not price. If prices continue to fall but implied volatility continues to rise, it means that the position structure will be forced to hedge. Liquidity will tighten, passive buying will be pushed to the forefront, and the market may experience a strong rebound. This is not due to a revival of faith, nor because of favorable news, but because the structure is being squeezed to the point where it must release its power. Conversely, if volatility stagnates or declines, it means that those willing to bet are exiting, and the market will shift from "potential reversal" to "potentially colder."
So the real question worth asking is not "Will Bitcoin rise?" but "Who needs it to move the most?" The answer is clear. Retail investors focus on price, while institutions focus on incentives. With the year-end time window limited, reports must be submitted, and bonuses must be realized. The rise in Bitcoin's volatility is like a machine being restarted; it indicates that someone has begun to treat Bitcoin as a tool for sprinting performance.
This statement may sound harsh, but it might be closer to the truth than any market prediction. The current volatility of Bitcoin does not resemble a natural cycle but rather a momentum accumulation with a clear purpose. Whether it will lead to a rebound or deeper declines depends not only on price but also on how far Wall Street is willing to push this machine to its limits.
The next few weeks will be exceptionally exciting. Because for institutions, there is no turning back. They must move, they must be volatile, and they must pry the market out of its stagnant state. Perhaps this is the true turning point for Bitcoin. Not because the story has changed, but because the incentives have changed. And when the incentives point to volatility, Bitcoin will once again become the most dangerous and powerful asset.
Related: Analyst: Bitcoin (BTC) Sell Pressure Eases, May Continue to Recover
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