Bybit, the world’s second-largest cryptocurrency exchange by trading volume, has released its latest Bybit x Block Scholes September Volatility Report: “Volatility Awakens with the First Term Structure Inversion in Months.” The report analyzes the reemergence of volatility in the crypto market, led by Bitcoin (BTC) and Ethereum (ETH), following months of calm and subdued price action.
Key Highlights:
BTC’s implied volatility surged sharply in mid-October following a $19 billion liquidation cascade — the largest in crypto history.
The event marked BTC’s first term structure inversion since April 2025, as short-term volatility spiked amid renewed U.S.–China trade tensions.
BTC and ETH prices briefly fell to $105,000 and $3,700, respectively, before partially recovering.
Options traders displayed heightened bearish sentiment, with short-dated BTC puts trading at a 13% volatility premium over calls.
Perpetual futures open interest collapsed, signaling broad market deleveraging.
The report attributes the resurgence in volatility to macroeconomic developments — specifically, the re-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. The announcement made after traditional markets had closed, contributed to a sharp weekend sell-off in crypto assets.
Bybit and Block Scholes observed that the term structure of BTC volatility inverted for the first time since April 2025, reflecting increased near-term uncertainty. Realized volatility spiked alongside implied measures, while the options market revealed strong demand for downside protection.
The study also noted that while volatility had been declining since April 2025, macro uncertainty persisted throughout the period. Despite this, BTC’s implied volatility had fallen to as low as 25% on Sept. 19, 2025 — one of its lowest readings of the year — before the October breakout.
In comparing the 2025 volatility awakening to a similar event in October 2023, the report finds shared patterns of prolonged calm followed by an abrupt spike. However, the drivers differ significantly: the 2023 volatility breakout was fueled by optimism over Spot Bitcoin ETFs, while the 2025 resurgence was triggered by macroeconomic stress and risk aversion.
Bybit’s latest report concludes that volatility remains an intrinsic feature of crypto markets, capable of resurfacing abruptly after long periods of stability. It further notes that volatility-driven strategies, such as straddles, can provide traders with potential opportunities to benefit from sharp market movements regardless of direction.
The full analysis is available in the Bybit x Block Scholes September 2025 Volatility Report.
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