Bitcoin has experienced more extreme daily price swings in 2026 than during the 2018 bear market, despite its overall volatility falling significantly. A CoinDesk analysis identified 10 unusually large trading days this year, highlighting potential weaknesses in traditional risk models as institutional participation in crypto markets expands.
Bitcoin recorded 10 days in 2026 when its price movement reached at least three standard deviations from its recent trading behavior, according to the analysis. That compares with eight such days throughout 2018, when the cryptocurrency plunged 73%.
These unusually large movements are measured in “sigma,” a statistical measure showing how far an asset’s price deviates from its typical range. CoinDesk compared Bitcoin’s daily price changes with its 30-day realized volatility, which measures average daily price fluctuations over the previous month. Any daily movement at least three times that volatility level, in either direction, was classified as a three-sigma event.
In a normal bell-shaped distribution, around 95% of movements fall within two standard deviations, while approximately 99.7% remain within three. Movements beyond that range are therefore considered uncommon and can signal significant market shocks. A higher frequency of these events suggests that an asset remains susceptible to sudden price changes even when its broader volatility is declining.
The findings show that Bitcoin’s typical price fluctuations have become smaller over the years, but unusually large movements continue to occur. This year, they have appeared more frequently than during the 2018 bear market, although their average size has decreased.
Bitcoin’s annualized volatility is approximately 46% in 2026, compared with 84% in 2018. Its average three-sigma price movement has also declined to roughly 7%, from around 10% eight years ago.
“Bitcoin still goes through long quiet stretches followed by sharp repricings, and that hasn’t changed,” said Nicolas Quatravaux, head of EMEA at Paradigm, an institutional liquidity network focused on crypto derivatives. He noted that institutional investors, exchange-traded funds and deeper liquidity have helped make ordinary trading days calmer. However, macroeconomic events, leverage and market positioning continue to generate sudden price shocks.
Bitcoin’s pattern is also unusual compared with other major assets. Since 2024, its volatility has been similar to Nvidia’s, at approximately 47%. Yet Bitcoin has recorded 26 three-sigma events during that period, while Nvidia has experienced eight. The S&P 500 has registered 16 such days, and gold has recorded 12.
Falling volatility may underestimate Bitcoin’s risk
The persistence of extreme price movements presents a challenge for investors who use volatility-based models to determine how much Bitcoin to hold.
One widely used measure is value-at-risk (VaR), which estimates the potential loss a portfolio could experience over a particular period. Because some VaR models rely heavily on recent market movements, a prolonged period of relatively calm trading can make an asset appear safer than it actually is.
Bitcoin’s declining 30-day, 90-day and 180-day volatility readings could therefore encourage investors to increase their holdings. However, these estimates may not fully reflect the possibility of sudden, outsized losses, depending on how the models are designed.
Another limitation is that VaR identifies a potential loss threshold without estimating how severe losses might become beyond that point. This is known as tail risk, which refers to the possibility of rare but exceptionally large losses outside an asset’s usual trading range. Bitcoin’s repeated three-sigma events demonstrate why investors need to account for such scenarios even when everyday volatility is falling.
“Standard VaR measures do not properly assess the full tail risk, and this is one of the main reasons industry has been moving towards Expected Shortfall and similar measures, that do take tail risk into account,” said Luuk Strijers, CEO of crypto options exchange Deribit.
Expected shortfall provides a more detailed view by estimating the average losses associated with the worst market outcomes. Unlike VaR alone, it helps investors assess how damaging extreme price movements could become.
Macroeconomic shocks and options positioning drive sharp moves
Market participants point to unpredictable macroeconomic developments and heavily leveraged derivatives positions as key factors behind Bitcoin’s recurring extreme trading days.
Quatravaux said 2026 offers a clear example of how these forces can interact. The year began slowly as capital moved into technology stocks, while several decentralized finance hacks encouraged investors to sell volatility and seek returns through structured products.
Subsequent developments involving U.S. President Donald Trump, the Iran war and Federal Reserve policy introduced further uncertainty. With many traders positioned for prices to remain within a narrow range, a single major headline could trigger a sharp market reaction, he said.
Risk can build when investors assume markets will remain relatively stable. Some traders sell options to collect premiums, effectively taking the other side of contracts that offer protection against large price swings.
These strategies can perform well during quiet periods. But when unexpected news causes prices to move sharply, options sellers may rush to reduce their exposure. That process can amplify the original price movement and create a more severe market shock.
Alexander S. Blume, co-founder and CEO of Two Prime, an SEC-registered investment adviser, highlighted call overwriting as another popular strategy. Investors using this approach sell call options against Bitcoin they already own, collecting premiums in exchange for giving up some potential gains if prices rise significantly.
Blume argued that growing derivatives positioning has allowed large price movements to remain relatively frequent despite lower overall volatility. He described call overwriting as a crowded trade, adding that an upward move, such as the one seen over the past month, can trigger a short squeeze and magnify the rally.
Institutional growth may be improving market resilience
Despite recurring shocks, Bitcoin’s market infrastructure appears better equipped to absorb volatility than it was in earlier years.
On Sept. 21, when Bitcoin recorded its latest three-sigma move, Paradigm facilitated a record $6.7 billion in options trading.
Quatravaux said there had been no reports of trading desks suffering significant losses from the event. He attributed the market’s resilience to more experienced participants, stronger risk management and greater institutional investment.
These improvements suggest that market participants can now manage periods of turbulence more effectively, limiting the likelihood that a difficult trading month will escalate into a broader crisis.
However, extreme price swings are unlikely to disappear. Quatravaux said a decade of data shows that these events have continued even as the market has matured. Since macroeconomic shocks remain unavoidable, Bitcoin is likely to experience sudden repricing episodes even if its average daily volatility continues to decline.
