Bitcoin: Volatility Vanishes in 7 Months... The 'Breather' That Drains Retail Investors Dry

▲ Bitcoin (BTC), US Dollar (USD)

In the Bitcoin (BTC) options market, implied volatility, which reflects expectations of future sharp price fluctuations, has fallen to its lowest level in 7 months. Analysis suggests that the easing of geopolitical tensions, Strategy's continuous Bitcoin purchases, and institutional investors' option selling strategies have combined to suppress the market's volatility outlook.

FXStreet reported on May 22 (local time), citing Volmex data, that Bitcoin's annualized 30-day implied volatility index (BVIV) fell to 38%. This is the lowest level since October 2025. A decline in implied volatility indicates that options market participants anticipate a low probability of significant price movements in the future.

Shiliang Tang, Managing Partner at Monarq Asset Management, explained that the collapse in Bitcoin volatility is clearly evident at the BVIV level. He stated that geopolitical risks stemming from the Iran conflict are moving into later stages, and continuous Bitcoin purchases through Strategy and the STRC perpetual preferred stock structure are acting as a structural floor, reducing downside volatility.

Systematic yield-seeking strategies in the options market were also cited as a factor in the decline in volatility. Tang analyzed that call overwriters are aggressively selling options to secure yields, creating strong upward pressure on the overall volatility structure. Call overwriting is a strategy where investors holding spot Bitcoin sell out-of-the-money call options with a strike price higher than their holding price to earn additional income. Repeated option selling by these institutional funds increases the supply of options and acts as a factor in lowering expectations for large price movements.

FXStreet reported that Bitcoin was trading around $77,000 at the time of writing. The crude oil market, often cited as a proxy for geopolitical risk, also showed relatively limited movement, with West Texas Intermediate (WTI) remaining below $100 per barrel.

Strategy's buying volume was also mentioned as a market stabilizing factor. According to FXStreet, Strategy purchased 171,238 BTC since the beginning of 2026. During the same period, approximately 63,450 BTC were mined, meaning Strategy's buying volume significantly exceeded the new supply. This imbalance was presented as a factor strengthening continuous institutional demand and reducing market supply.

The decline in Bitcoin's volatility is also linked to its increasing maturity as an institutional asset. FXStreet explained that as Bitcoin adoption expands across ETFs, asset managers, corporations, and treasury allocation entities, liquidity is deepening, and ownership is diversifying. The extreme volatility that characterized the early market is now presented as gradually moderating amidst a broader ownership structure and deeper liquidity.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*