Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has released its latest Bybit x Block Scholes September Volatility Report, titled “Volatility Awakens with the First Term Structure Inversion in Months.” The report highlights a sudden resurgence of volatility in the crypto market, driven primarily by Bitcoin (BTC) and Ethereum (ETH), after a prolonged period of calm and subdued price action.
Financial Technology Insights: Major Life Provider Chooses Advisor360° for Wealth Tech
According to the report, BTC’s implied volatility surged sharply in mid-October following a massive $19 billion liquidation cascade the largest in crypto history. This event triggered BTC’s first term structure inversion since April 2025, with short-term volatility spiking amid renewed tensions between the U.S. and China. Prices of BTC and ETH briefly dropped to $105,000 and $3,700, respectively, before partially rebounding.
Options traders showed heightened bearish sentiment, with short-dated BTC puts trading at a 13% volatility premium over calls, while perpetual futures open interest collapsed, signaling broad market deleveraging. The report attributes this spike in volatility to macroeconomic developments, particularly the escalation of trade hostilities between the United States and China. Following Beijing’s new export controls on rare earth minerals, U.S. President Donald Trump announced plans for a 100% tariff on Chinese imports, contributing to a sharp crypto sell-off over the weekend.
Financial Technology Insights: One Billion Acquisition of GTreasury By Ripple Signals a Bold Shift Toward Leadership
Bybit and Block Scholes noted that the term structure of BTC volatility inverted for the first time since April 2025, reflecting increased near-term uncertainty. Realized volatility rose alongside implied measures, and the options market revealed strong demand for downside protection.
The study also compared the October 2025 volatility surge to a similar breakout in October 2023. While both events followed periods of market calm, the drivers differed: the 2023 spike was fueled by optimism over Spot Bitcoin ETFs, whereas the 2025 resurgence was triggered by macroeconomic stress and heightened risk aversion.
Financial Technology Insights: Major Crypto Shakeup as Coinbase Acquires Echo for $375 Million
The report concludes that volatility remains an intrinsic feature of crypto markets, capable of returning abruptly even after extended periods of stability. For traders, volatility-driven strategies, such as straddles, offer opportunities to potentially profit from sharp market movements in either direction.
This analysis underscores the unpredictable nature of crypto markets and highlights the importance of monitoring macroeconomic developments alongside market data to navigate sudden volatility spikes.
To share your insights with the FinTech Newsroom, please write to us at sudipto@intentamplify.com