Bitcoin has recorded more extreme daily price movements in 2026 than during the 2018 bear market, even though its overall volatility has dropped considerably. CoinDesk’s analysis identified 10 days this year when Bitcoin experienced unusually large price swings, raising concerns about whether traditional risk assessment tools adequately capture the cryptocurrency’s exposure to sudden losses.
The analysis found that Bitcoin registered 10 trading days in 2026 when its price moved at least three standard deviations away from its recent pattern. That surpasses the eight similar events recorded during 2018, when Bitcoin’s value declined by 73%.
Traders use “sigma” to measure how far an asset’s price movement deviates from its usual behavior. To identify extreme movements, CoinDesk compared Bitcoin’s daily price changes with its 30-day realized volatility, which measures the scale of price fluctuations over the previous month. A move that reached at least three times this volatility measure, whether higher or lower, qualified as a three-sigma event.
In a normal bell-shaped statistical distribution, roughly 95% of movements fall within two standard deviations, while 99.7% remain within three. Movements outside that range are uncommon and can indicate significant market disruptions. Frequent three-sigma events suggest that an asset remains vulnerable to sudden shocks, even when its overall volatility is declining.
The results indicate that Bitcoin has become less volatile over time, but its sharpest daily moves remain a recurring feature. These events have occurred more frequently in 2026 than in 2018, although their average size has become smaller relative to earlier years.
Bitcoin’s annualized volatility is currently around 46%, compared with 84% in 2018. Its average three-sigma price movement has also decreased to approximately 7%, down from about 10% eight years ago.
Nicolas Quatravaux, Paradigm’s head of EMEA, said Bitcoin continues to experience extended periods of relatively quiet trading followed by abrupt price adjustments. He attributed the calmer average trading environment to the growth of institutional participation, exchange-traded funds and deeper liquidity, while noting that macroeconomic developments, leverage and market positioning continue to produce sudden shocks.
Bitcoin’s pattern also differs from that of other major assets. Since 2024, its volatility has been broadly comparable to Nvidia’s at approximately 47%. However, Bitcoin has recorded 26 three-sigma events over that period, compared with eight for Nvidia. The S&P 500 has experienced 16, while gold has recorded 12.
Traditional risk models may miss extreme losses
The persistence of unusually large price swings creates a challenge for investors who use volatility-based models to determine their Bitcoin exposure.
One common measure is value-at-risk (VaR), which estimates the amount a portfolio could lose over a specified period under particular market conditions. Some VaR models place significant weight on recent price behavior, meaning an extended period of lower volatility can make an asset appear less risky.
As Bitcoin’s 30-day, 90-day and 180-day volatility readings decline, these models may encourage investors to increase their holdings. However, the calculations may underestimate the possibility of unusually large losses, depending on how the models are constructed.
VaR also identifies a potential loss threshold without estimating how severe losses could become after that threshold is exceeded. This limitation is known as tail risk, referring to the possibility of rare but substantial losses outside an asset’s normal trading range. Bitcoin’s repeated three-sigma events underline the importance of accounting for these outcomes even when routine price fluctuations become smaller.
Luuk Strijers, CEO of crypto options exchange Deribit, said conventional VaR measures do not adequately capture the full extent of tail risk. He noted that the industry has increasingly adopted Expected Shortfall and similar approaches to address this weakness.
Expected shortfall estimates the average loss during the worst market outcomes, providing investors with a clearer view of the potential damage from extreme movements rather than simply calculating a loss threshold.
Why Bitcoin continues to experience sharp swings
Market participants attribute Bitcoin’s recurring extreme moves to unpredictable macroeconomic events and heavily leveraged options positioning.
Quatravaux said developments throughout 2026 demonstrate how these forces can combine. The year began slowly as capital shifted toward technology stocks, while a series of decentralized finance hacks encouraged traders to sell volatility and pursue yield through structured products.
Later, news involving U.S. President Donald Trump, the Iran war and Federal Reserve policy introduced fresh uncertainty. With many traders betting on a relatively narrow trading range, a single headline could trigger a disproportionately large move, Quatravaux said.
The risk increases when traders expect prices to remain stable. Selling options allows them to collect premiums in exchange for taking on exposure to potential price swings. These strategies can be profitable during calm conditions, but unexpected developments can force sellers to close positions quickly, amplifying the initial market movement.
Alexander S. Blume, co-founder and CEO of Two Prime, an SEC-registered investment adviser, pointed to call overwriting as another widely used strategy. Investors sell call options against Bitcoin they already own, collecting income while sacrificing some potential upside if prices rise beyond the agreed level.
Blume said growing derivatives positioning has allowed large price movements to remain relatively common despite lower overall volatility. He also described call overwriting as a crowded trade, warning that upward price movements can trigger short squeezes and magnify rallies.
A more resilient market, but extreme moves remain
Bitcoin’s market infrastructure appears better able to absorb sudden shocks than it was several years ago.
On Sept. 21, the day Bitcoin experienced its latest three-sigma jump, Paradigm facilitated a record $6.7 billion in options trading.
Quatravaux said there were no reports of trading desks taking significant losses during the episode. He credited improved risk management, more sophisticated market participants and greater institutional involvement with helping the market withstand turbulence.
These developments suggest that extreme price movements may be easier for the market to absorb than in the past, reducing the likelihood that a difficult month automatically turns into a wider crisis.
Nevertheless, investors should not expect such events to disappear. Quatravaux said a decade of market data shows that unusually large trading days have persisted despite Bitcoin’s maturation. With macroeconomic shocks likely to continue, sudden price adjustments are expected to remain part of the market even if overall volatility declines further.
