Bitcoin Volatility Awakens as Market Signals Heightened Turbulence
12/11/2025

Bitcoin’s BTC $103,794.06 volatility is stirring after months of dormancy, suggesting a period of increased price swings and uncertainty for traders.

The Volmex 30-day implied volatility index (BVIV) has recently broken above a year-to-date trendline, rising from earlier lows around 73% annualized. Analysts interpret this as a bullish breakout for volatility, indicating that market turbulence may continue in the near term.

Experts point to three main drivers behind the uptick: retreating volatility sellers, thinner liquidity, and ongoing macroeconomic uncertainty.

Volatility Sellers Step Back

Throughout 2025, volatility sellers—including OG holders, miners, and whales—had suppressed swings by aggressively overwriting call options, generating yield while keeping implied volatility low. Since the sharp October 10 selloff, which saw Bitcoin fall from nearly $120,000 to $105,000 and altcoins drop over 40%, these participants have pulled back.

“The typical volatility sellers have notably stepped back, consistent with their tendency to sell call options only in rising markets,” said Jimmy Yang, co-founder of Orbit Markets. “Meanwhile, institutional demand for downside protection via out-of-the-money puts has pushed implied volatility higher.”

Yang added that with fewer sellers in the market and growing demand for downside hedges, elevated volatility is likely to persist short term.

Thin Liquidity Amplifies Price Moves

Market liquidity has deteriorated since the October crash, making Bitcoin more sensitive to large orders. Record forced liquidations totaling $20 billion during the selloff caused significant losses for market makers, some of whom have since reduced trading activity due to concerns over automatic deleveraging (ADL).

“With fewer liquidity providers actively quoting prices, order books are thinner, and price swings are magnified,” Yang explained.

Jeff Anderson, head of Asia at STS Digital, echoed this view: “Institutional players have lowered risk limits and pulled back from trading, keeping implied volatility elevated until sentiment and market credit improve.”

Macro Uncertainty Adds Pressure

Macro factors continue to feed volatility. Griffin Ardern, head of BloFin Research and Options, highlighted the ongoing U.S. government shutdown and high-cost fiat liquidity as key drivers.

“Political uncertainty remains despite Senate approval to reopen the government, and missing economic data clouds the Fed’s policy outlook. Inflation concerns and hesitancy on rate cuts continue to underpin higher tail risks and backwardation in the options market,” Ardern said.

He emphasized that these are systemic risks rooted in macro conditions rather than asset-specific events, keeping implied volatility elevated for the foreseeable future.