Bitcoin Volatility Rises After Trump’s Bitcoin Reserve Announcement and Options Expiry

Bitcoin’s price has entered a volatile range, fluctuating between $78,000 and $82,000, following a period of bullish momentum and macroeconomic shifts. The market saw a brief spike above $90,000 last week, but a “sell-the-news” reaction to events like the U.S. Strategic Bitcoin Reserve and the White House Crypto Summit led to a pullback, erasing earlier gains.

The volatility was further exacerbated by the expiration of $3 billion in Bitcoin and Ethereum options contracts, which occurred last Friday. This options expiry caused significant price swings and saw realized volatility surge above 80%, while implied volatility jumped 35.7% ahead of the summit as traders hedged their positions.

On-chain data also showed widespread losses, with $818 million in realized losses recorded per day, especially on February 28 and March 4, marking some of the largest loss events in this cycle. The Bitcoin Spent Output Profit Ratio (SOPR), a key metric used to measure whether Bitcoin holders are selling at a profit or loss, fell below 1.0 for the first time since October 2024, suggesting distress selling. Short-term holders, in particular, faced significant losses, with their SOPR at 0.95, the second-largest negative reading during this cycle. While these levels might attract buyers if the bull market structure holds, extended weakness could signal further downside.

The broader economic landscape is contributing to the uncertainty in the crypto market. The U.S. job market remains strong, with 151,000 jobs added in February, but the unemployment rate rose to 4.1% due to government job cuts. Inflationary pressures and trade disruptions, particularly from new tariffs, pose risks to economic stability. Meanwhile, the manufacturing sector is facing challenges, with production costs rising and slowing new orders.

The U.S. government’s approach to Bitcoin has also shifted. The Strategic Bitcoin Reserve, now holding 187,000 BTC worth approximately $13 billion, reflects a policy change from selling seized Bitcoin to retaining it as a national asset. Furthermore, the administration is pushing for stablecoin legislation by August and aims to end restrictive policies like Operation Choke Point 2.0.

Meanwhile, Japan is introducing crypto-friendly tax reforms, such as a 20% capital gains tax on digital assets and tax deferrals on crypto-to-crypto swaps, which could encourage more investment in digital assets.

As these factors continue to evolve, Bitcoin’s price and volatility will likely remain influenced by a combination of market sentiment, economic data, and regulatory developments.