Bitcoin News Today: Institutional Adoption Reduces Bitcoin's Price Swings Despite Steep Decline
Bitcoin has recently experienced a 36% drop from its October high, highlighting a fundamental change in its market behavior. The days of high volatility and speculation led by retail investors are giving way to a more institutionalized environment. This decline, which wiped out more than $1 trillion in crypto value, has occurred alongside notably low implied volatility -
At the same time, Bitcoin’s price has been shaped by broader economic trends, such as expectations for Federal Reserve interest rate cuts and the unwinding of leveraged positions in the derivatives sector
Despite the steep decline, volatility has remained muted, marking a shift from previous cycles. During the 2021-2022 period, sharp price drops in Bitcoin were usually accompanied by surges in implied volatility, driven by retail speculation and liquidity issues. Now, institutional investors—including ETF participants and options market makers—are helping to stabilize prices through hedging and passive investment strategies. Greg Magadini from Amberdata points out that ETF investors frequently purchase puts and sell covered calls, which helps limit extreme price movements and brings stability. “As the market cap increases, it requires more capital to significantly move prices,” he explained
Still, some market watchers caution that options-driven volatility could return. Jeff Park from Bitwise notes that rising implied volatility and changing options positions may signal a comeback of more pronounced price swings for Bitcoin. “It’s the options market, not just spot trading, that drives the major moves pushing Bitcoin to new peaks,” Park said,
Looking forward, Bitcoin’s price appears to be finding a new balance. After dipping below $85,000 in early December, it found support around $80,000, and the Relative Strength Index indicates that bearish momentum may be waning.
