Bitcoin traded down from about $85k to around $60k before stabilizing near $66k. Implied volatility for March 2026 expiry options jumped from approximately 40% to 65%, then eased back toward 50%. Matrixport says a volatility surge and thinning liquidity may precede a rebound.
The report indicated that a sharp decline in Bitcoin led to a rapid increase in implied volatility in the options market, followed by a partial pullback. The rebound indicated strong investor demand for hedging against downside risks during the decline. The subsequent drop in volatility to around 50% suggested that tail risk hedges were unwinding and short-term pressure had eased somewhat.
Matrixport stated that the market remains in a high-volatility environment, with investor sentiment extremely pessimistic and liquidity continuing to flow out of the market. Historically, this combination has often preceded strong upward movements in cryptocurrency markets. Matrixport also noted that while there are signs of partial improvement in macroeconomic conditions, the lack of a clear reaction from cryptocurrency prices may not continue for long.
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