Bitcoin and Volatility
Recent Market Movements and Sentiment
As of this week, Bitcoin has rebounded to circa $70,899, then dropped 2% to circa $69,037. This comes after a significant decline from a market high of $122,200 in October 2025, including a fall several days ago to a 16-month low of $60,074.20. In just under four months, Bitcoin has declined nearly 50% and once again reignited debate over the cryptocurrency’s stability. Cryptocurrency experts suggest that sentiment towards Bitcoin is not overly bearish and advise that the coin could go higher to $73,000 – $75,000, where they expect initial resistance to occur. However, analysts report that traders remain on edge, uncertain as to whether or not the worst is over, but suggest that $60,000 is the main support on the downside.
The Shift in Market Concentration and Volatility
The extended slide in Bitcoin began last October after the coin had hit its peak, having been pushed higher for most of 2025 by the pro-crypto agenda emanating from the White House. This week, the value of the cryptocurrency market is circa $2.5 Trillion, of which Bitcoin accounts for circa 60%. Also, on Thursday, 5th February, the Bitcoin Volmex Implied Volatility Index* surged from 57% to over 97%. One expert announced that volatility had doubled from the previous week, and data released showed that investors had pulled on the same day, $434 Million from US ETFs (Exchange Traded Funds) alone.
*Bitcoin Volmex Implied Volatility Index – is designed to measure the constant 30-day expected volatility of the Bitcoin options market derived from real-time crypto call and put options.
Historical and Political Catalysts for Market Whipsaws
The catalyst for whipsaw reactions in the Bitcoin market has been different, starting with the late 2022 collapse of FTX*, resulting in Bitcoin plummeting to its lowest price for two years. In October last year, the coin collapsed from its peak, wiping out in a single day billions of dollars of trading positions due to, say experts, President Donald Trump issuing a boatload of tariff threats. Analysts suggest that due to the tariff threat and its negative impact on Bitcoin, investors in the currency now have a reduced appetite for buying digital tokens and coins in general, thus making it harder for the coin to recover lost ground over the longer term.
*FTX – The 2022 collapse of FTX, a cryptocurrency exchange, once valued at circa $32 Billion, triggered massive industry-wide losses, severe regulatory crackdowns and a $1 Billion multi-year bankruptcy process to repay creditors. Driven by a liquidity crisis, the fall-out revealed misuse of customer funds by Alameda Research, leading to criminal charges for founder Sam Bankman-Fried and widespread contagion in the crypto markets.
Geopolitical Tensions and Early 2026 Turbulence
This year has hardly begun, and we have already seen dramatic volatility in Bitcoin. The initial fall in January was, according to experts, due to inflamed geopolitical tensions, including President Trump’s threats to take over Greenland, a country belonging to Denmark and therefore a NATO ally. The geopolitical problems led to a sell-off in global stocks and commodities, including gold and silver, which experts suggest was part of the reason for the drastic fall in the price of the cryptocurrency.
The Impact of Federal Reserve Leadership and the Strong Dollar
The recent fall in Bitcoin has been attributed to the announcement by President Trump of his pick for the New Chairman of the Federal Reserve, Kevin Warsh, who is to replace the incumbent Jerome Powell. Financial markets and investors will, say technical analysts, see his reputation as a strong dollar and inflation hawk as a sign that any rapid rate cuts as advocated by President Trump will not happen. As a result, the dollar spiked, and Bitcoin moved sharply lower. As can be seen, there have been tentative rallies in Bitcoin that have attracted the dip buyers who, as soon as prices reverse, immediately sell, draining further liquidity from the market.
Declining Institutional Demand and the “Crypto Gold” Debate
Several crypto commentators have also said that institutional demand has fallen off, and further suggested that the coin, which has in the past been referred to as a type of crypto gold as a hedge against currencies and stocks falling, and other market stress, is no longer tenable. Experts suggest that the market continues to be somewhat fragile, and with US-listed Bitcoin ETFs continuing to experience persistent outflows, the expectation of further monetary easing taking a back seat, plus the strengthening of the US Dollar, institutional portfolios are treating crypto assets as less of a priority.
The Bull Case and Long-Term Outlook
Whilst there is definitely a bearish outlook in the Bitcoin market, the Bulls still suggest that the price could go as high as $175,00 with some claiming as high as $250,000. Some experts suggest that the market’s interpretation is wrong, and point to Mr Warsh’s statement supporting lower rates. They also pointed out that perception rather than fundamentals drove much of the recent sell-off, and historically, after a spate of selling, Bitcoin goes on an extended bull run, plus the fact that Bitcoin’s hard cap of 21 million coins remains a crucial anchor for long-term value. However, whatever the pros and cons, Bitcoin will, for the time being, be subject to bouts of volatility.
