Bitcoin volatility gradually weakens, making a rally at the end of the year unlikely

According to the latest market analysis, Bitcoin's implied volatility continues to be under pressure, and this change is gradually altering market expectations for the end-of-year rally. As volatility keeps declining, investors' optimism about a surprising upward breakout in December is also waning.

The Federal Open Market Committee (FOMC) meeting is undoubtedly the most important catalyst in the near term. But from a longer-term perspective, once the meeting concludes, volatility is expected to further contract until the holiday market enters the traditional quiet trading period. This means that the short-term momentum driving the market will significantly weaken.

To change this situation, continuous inflows into new Bitcoin ETFs will be key. However, in the absence of such incremental capital, the market is gradually becoming stagnant — range-bound trading will become the main theme. The accompanying phenomenon of range-bound trading is usually a further decline in volatility.

In fact, this adjustment is already underway. The ongoing decline in implied volatility is gradually rewriting market expectations, and the probability of an unexpected rally by the end of December is decreasing. Investors should be prepared to respond flexibly in a low-volatility environment.