The root cause of the death of bitcoin’s volatility

Institutions, specifically the options market, is what has killed Bitcoin’s trading attraction. Once you understand how the structure works, you’ll then understand why it’s now literally impossible for Bitcoin to ever go on a quick run up (or even down). Volatility has been killed and that was the main attraction behind Bitcoin.

Now let me explain why this will essentially never change. Now, tons of stocks in the traditional market have options, and many of them run up or down pretty violently.

But here’s the kicker: platforms like Deribit offer daily BTC/ETH/etc options. This essentially means that daily, market makers have to hedge every single little micro move in order to ensure they don’t go bankrupt, especially for options where the delta (sensitivity of an option’s price to the underlying) changes very fast. This changes the fastest for options expiring the same day. The only place where daily options are offered on the stock market are on the actual index ETFs, like SPY etc. And what is the result? SPY/etc rarely moves more than even 1.5% a day. Most days, it doesn’t even move 0.6%. They started offering these options in 2022. Look at the volatility of SPY over time. It has significantly dampened.

The options market has killed BTC. Not many people understand that there’s virtually zero way for BTC to function as anything other than a stable coin or a long term, slow, investment. It is now structurally impossible for BTC to go on a fast run up or even a fast crash down. If people actually understood and knew this, I doubt they’d be trading this market at all.