Bitcoin’s price volatility has surged to its highest level in six months as escalating U.S. economic uncertainty and shifting policy dynamics amplify market turbulence. Over the past week, bitcoin’s 30-day volatility climbed to 3.6%, up sharply from 1.6% a month ago, reflecting heightened speculative activity and macroeconomic risks. The cryptocurrency’s price fluctuated between $80,338 and $96,891 this week, a 20% drop from its January all-time high of $109,117, according to CoinGlass data.
Analysts attribute the instability to growing concerns over inflation, trade tensions, and delayed Federal Reserve rate cuts. Federal Reserve Chair Jerome Powell acknowledged “unusually high” macroeconomic uncertainty during the central bank’s March meeting, while markets increasingly priced in prolonged higher borrowing costs. “This volatility will persist until there’s clarity on tariffs, inflation, and monetary policy,” said Greg Magadini of Amberdata. The CBOE Volatility Index (VIX), a benchmark for stock market fear, recently spiked to 30, its highest since August 2024, as the S&P 500 erased post-election gains.
Derivatives markets intensified price swings, with bitcoin options open interest surging by 44,000 BTC in recent weeks. Short-term call options are trading at unprecedented premiums, signaling bets on rapid price appreciation ahead of potential policy announcements. Traders are closely watching the Trump administration’s evaluation of a strategic bitcoin reserve, a proposal that initially fueled January’s rally. “Trump’s tariff policies and social media influence remain wildcards,” noted GSR trader Mitch Galer.
Leverage unwinding added pressure, as billions in long positions were liquidated during intraday selloffs. On-chain data shows dormant bitcoin holders moving coins to exchanges, risking further selloffs. Despite the turbulence, industry experts emphasize bitcoin’s long-term resilience. “Volatility cycles are inherent—today’s pullback could become tomorrow’s entry point,” said Grayscale’s Zach Pandl, highlighting bitcoin’s role as an inflation hedge. The Bitcoin Volatility Index (BVOL) last week hit 67, nearing levels seen during 2023’s banking crisis, while the Bitcoin Volmex Implied Volatility index (BVIV) reached 71.
Sources:
https://www.coindesk.com/markets/2025/01/20/bitcoin-volatility-climbs-to-6-month-high-as-options-frenzy-picks-up
https://www.ainvest.com/news/bitcoin-volatility-surges-economic-uncertainty-2503/
https://calebandbrown.com/blog/bitcoin-volatility/
https://www.bullionbypost.co.uk/bitcoin-price/bitcoin-price-6-month-usd/
https://www.ainvest.com/news/bitcoin-drops-2-43-economic-uncertainty-2503
