Bitcoin's Annualized Volatility Drops to 46%, Extreme Market Events Exceed 2018 Bear Market

On October 10, Bitcoin has recorded 10 trading days with "three standard deviations" so far in 2026, surpassing the 8 occurrences in the entire year of the 2018 bear market. Bitcoin's annualized volatility has decreased from 84% in 2018 to about 46%, yet extreme market events continue to occur frequently. "Three standard deviations" is used to measure the extent of price deviation from normal volatility ranges. This year, the average price fluctuation for Bitcoin during such extreme events is about 7%, lower than the approximately 10% seen in 2018. Since 2024, Bitcoin's volatility has been around 47%, similar to Nvidia, but during the same period, Bitcoin has experienced 26 trading days with "three standard deviations", far exceeding Nvidia's 8 occurrences, the S&P 500's 16, and gold's 12. Market participants point out that macro shocks and the leverage and concentrated positions in the derivatives market are significant factors contributing to the persistence of extreme volatility. When investors sell options in large quantities, betting on market calmness, sudden news can force related positions to close, further amplifying price fluctuations. Deribit CEO Luuk Strijers stated that traditional Value at Risk (VaR) models struggle to adequately measure tail risks during extreme market events, and investors should pay more attention to risk indicators such as Expected Shortfall. Increased institutional participation, deeper liquidity, and improved risk management enhance the market's ability to withstand shocks, but this does not mean that extreme volatility will disappear.

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