Bitcoin in 2026, especially in the last 10 days, has undergone strange price changes. These changes have deviated by three standard deviations from the recent trading pattern, which is higher than the eight days recorded in 2018 when the value of this cryptocurrency dropped by 73%.
'Three Sigma' Metric and Volatility Analysis
To measure such unusual changes, traders use the 'sigma' metric. This metric indicates how far the price of an asset is from its normal behavior. Analysts identify significant changes by comparing daily price volatility with the 30-day realized volatility of Bitcoin. Days when Bitcoin's price changes are at least three times its normal daily volatility over the past 30 days are known as 'three sigma days.'
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In a normal distribution, about 95% of changes fall within two standard deviations, and 99.7% of them fall within three standard deviations. Therefore, 'three sigma' changes are considered rare, and traders use this metric to identify large fluctuations. The frequency of these events indicates that an asset remains susceptible to sudden shocks, even if its overall volatility has decreased.
Impact of Volatility on the Cryptocurrency Market
Data show that Bitcoin's volatility has decreased in recent years, yet this cryptocurrency continues to experience severe price changes. The number of these events this year has surpassed that of 2018. In other words, the number of large price changes compared to Bitcoin's recent volatility has increased, although the magnitude of these changes has become smaller.
Bitcoin's annual volatility this year is about 46%, while this figure reached 84% in 2018. The average 'three sigma' changes have also decreased from about 10% that year to around 7% now.
Nicola Quatravoo, Head of Europe, the Middle East, and Africa at Paradigm, comments on the market situation: 'Bitcoin continues to go through long periods of calm followed by severe price changes, and this situation has not changed.'
He also added that the market has matured, and with the increased presence of financial institutions and exchange-traded funds, daily fluctuations have generally decreased. However, macroeconomic shocks, financial leverage, and traders' positioning still exist.
This difference in comparing Bitcoin with other volatile assets is also noticeable. Since 2024, Bitcoin's volatility has been around 47%, which is roughly equivalent to the volatility of Nvidia stock. However, Bitcoin has recorded 26 'three sigma' days during this period, while Nvidia has had eight days.
The positive note is that the market now absorbs price shocks better than before. On September 21, coinciding with the last 'three sigma' spike of Bitcoin, Paradigm recorded an options trading volume worth $6.7 billion. Quatravoo states: 'This time we haven't seen any trading desks suffer heavy losses. Market participants have become much more professional than a few years ago, and risk management has significantly improved.'
He continues: 'However, it is not expected that severe price fluctuations will stop anytime soon. Data from the past 10 years show that despite the market's maturity, volatile days have not disappeared, as macroeconomic shocks will continue.'
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