Realized volatility is calculated by measuring how much the price of an asset has fluctuated over past periods and by annualizing it, usually taking the standard deviation of daily (often logged) returns. This is not the implicit volatility that reflects the market’s expectations for future price fluctuations.
The volatility achieved is important as it captures real market risk and helps investors measure whether price movements are consistent with risk tolerance. It also reveals that the market is stressed due to large fluctuations in prices.
Since the beginning of March, Bitcoin has seen a turbulent market characterized by rapid price fluctuations. Opening Days in March ended a serious late February sale, followed by an equally sharp pullback after the Bitcoin stage. These sudden movements have resulted in a significant increase in volatility achieved.
The rapid ups and downs of early March helped fuel a surge in volatility achieved over the week. Traders observed some of the most significant daily rate changes in months and led short-term volatility measures far beyond their normal range. As key price fluctuations continued, so did the volatility measures realized for two weeks and one month. Long-term metrics tended to capture the volatility of the combination of sale in February and rebounds in March, and drive them upwards.
Volatility peaked during the first three days of March, but gradually declined as the market tried to stabilize. Readings for the week were slightly reduced, reflecting slightly milder price behavior, but wider volatility remained higher than in previous months.
Bitcoin exhibited classic patterns of volatility clustering. This is followed by a storm. Before the collapse in late February, Bitcoin prices were relatively stable (volatility was low from January to early February). This calm suddenly broke down in the crash in late February, leading to a highly volatility administration that was carried in March.
Historically, low volatility lulls often precede a sharp surge in crypto and traditional markets. In this case, weeks of consolidation followed by the most unstable episodes of months, examining the idea that stability can breed instability as market pressures are quietly built and then released.
By definition, realised volatility stems from price movements, so it is not surprising that the realised volitional spikes coincided with substantial daily price fluctuations. However, it is worth paying attention to symmetry. Volatility has skyrocketed regardless of price direction. In early March, one day’s extreme rally and the next day’s sudden charge both contributed to the volatility spike. This emphasizes that it achieved a measure of volatility rather than whether movement is up or down.
During that week, Bitcoin’s upward swing (March 1-March 2) and downward swing (March 2-March 4) were both huge, and together they pushed seven-day volatility off the charts. Traders have seen that periods of high realised volatility correspond precisely to the age of desperate trading and big candles on price charts.
With each bitcoin’s daily candle expanding (long core/body showing significant daytime range), subsequent realized volatility metrics rose in tandem. This tough correlation took place during March: When price movements subsided, short-term volatility measures also fell.
These extreme fluctuations indicate significant market stress. Negative sentiment and sales pressures emerged in late February, resulting in a surge in short-term realization volatility. This reinforces the high volatility indicating an increased risk.
Concerns surrounding a new wave of trade disputes caused a fall in late February and continued to affect the market in March. Investors have helped to increase volatility by escaping high-risk assets like Bitcoin amid new uncertainties.
The forecasts surrounding the White House Summit on Crypto and speculations about government actions regarding the proposed crypto-protected areas added to market-wide uncertainty. Bitcoin is so sensitive to regulatory signals that potential changes in the stance have incited volatility further.
Perceived volatility may provide an early warning of a changing market regime. In this case, the eruption of volatility confirmed a shift from government self-satisfaction to turbulence correction. Second, comparing price action with realized volatility can help identify extraordinary movements.
The fact that in March, the weekly volatility exceeded 100% indicates that price fluctuations were not merely magnitude, but were historically important for Bitcoin. It also showed that Bitcoin is not traded on its own. Events such as policy changes, economic data, and global crises are fed directly to their volatility. Volatility in March 2025 was attributed to crypto-specific factors and external shocks (such as tariffs and changes in regulations).
As traders face extreme price fluctuations, a surge in Bitcoin’s realized volatility first appeared in encryption.
