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 details the reemergence of significant volatility in the cryptocurrency market, particularly for Bitcoin (BTC) and Ethereum (ETH), after a prolonged period of subdued price action.
Key Market Movements and Observations
- •Bitcoin's implied volatility experienced a sharp surge in mid-October, following a liquidation cascade valued at $19 billion, which was the largest recorded in crypto history.
- •This event marked the first instance of Bitcoin's term structure inversion since April 2025. This inversion occurred as short-term volatility escalated amidst renewed trade tensions between the United States and China.
- •Both Bitcoin and Ethereum prices saw a brief decline, with BTC falling to $105,000 and ETH to $3,700, before a partial recovery.
- •Market sentiment among options traders indicated a heightened bearish outlook, evidenced by short-dated BTC put options trading at a 13% volatility premium over call options.
- •A significant collapse in perpetual futures open interest was observed, signaling a broad deleveraging across the market.
Macroeconomic Factors Driving Volatility
The report identifies macroeconomic developments as the primary catalyst for the recent surge in volatility. Specifically, the re-escalation of trade hostilities between the United States and China played a crucial role. Following Beijing's imposition of new export controls on rare earth minerals, U.S. President Donald Trump announced plans for a 100% tariff on Chinese imports. This announcement, made after traditional markets had closed, contributed to a sharp sell-off in crypto assets over the weekend.
Analysis of Volatility Trends
Bybit and Block Scholes noted that Bitcoin's volatility term structure inverted for the first time since April 2025, reflecting an increase in near-term market uncertainty. Both realized and implied volatility measures spiked concurrently. The options market data further indicated a strong demand for downside protection among investors.
The report highlights that while overall volatility had been on a declining trend since April 2025, underlying macroeconomic uncertainty persisted throughout this period. Despite this persistent uncertainty, Bitcoin's implied volatility had dropped to as low as 25% on September 19, 2025, one of its lowest readings for the year, prior to the October market breakout.
Comparison with Previous Volatility Events
When comparing the 2025 volatility event to a similar period in October 2023, the report identifies shared patterns of prolonged calm followed by an abrupt spike. However, the underlying drivers for these events differ significantly. The 2023 volatility surge was largely fueled by optimism surrounding the potential approval of Spot Bitcoin ETFs, whereas the 2025 resurgence was triggered by macroeconomic stress and a general increase in risk aversion.
Conclusion on Volatility in Crypto Markets
Bybit's latest report concludes that volatility remains an inherent characteristic of cryptocurrency markets, capable of reappearing suddenly even after extended periods of stability. The report further suggests that volatility-driven trading strategies, such as straddles, can offer traders potential opportunities to capitalize on sharp market movements, irrespective of their direction.
The complete analysis is accessible in the Bybit x Block Scholes September 2025 Volatility Report.
About Bybit
Bybit is recognized as the world's second-largest cryptocurrency exchange based on trading volume, serving a global user base exceeding 70 million. Established in 2018, Bybit is dedicated to fostering a more open and equitable ecosystem within the decentralized world. With a strong emphasis on Web3 technologies, Bybit engages in strategic partnerships with leading blockchain protocols to provide robust infrastructure and stimulate on-chain innovation. Known for its secure asset custody, diverse trading marketplaces, user-friendly interface, and advanced blockchain tools, Bybit effectively bridges the gap between traditional finance (TradFi) and decentralized finance (DeFi). This empowers developers, creators, and enthusiasts to fully realize the potential of Web3. Explore the future of decentralized finance at Bybit.com.