Emre Yumlu 
Market volatility indicators have begun to stabilize after a turbulent period, strengthening expectations for a potential year-end rally in both Bitcoin and U.S. stocks. With the probability of a Federal Reserve rate cut in December rising once again, risk appetite is recovering, and options-based volatility indices are echoing this shift with renewed optimism.
Volatility Retreats, Strengthening Bullish Sentiment
Implied volatility measures tied to Bitcoin and the S&P 500 have erased nearly all of their recent spikes. Bitcoin’s 30-day BVIV index, calculated by Volmex, surged to nearly 65% in the days leading up to Nov. 21 but has since dropped back to an annualized 51%. This reversal came as Bitcoin’s price plunged from around $96,000 to below $80,000—a move that briefly ignited panic across the market. The quick decline in volatility suggests that fear has largely dissipated.
Deribit’s DVOL index reflects a similar pattern, mirroring the volatility swings seen across Wall Street. Meanwhile, the VIX—often referred to as the stock market’s “fear gauge”—jumped to 28% during the same period before falling back to 17%. Collectively, these signals indicate that risk-on sentiment is resurfacing as the market approaches the final month of the year.
Bitcoin Rebounds as Its Inverse Volatility Correlation Holds
Since last Friday, Bitcoin has climbed back above the $91,000 level, continuing to move inversely to its volatility index. This persistent negative correlation, which has become more pronounced since late last year, aligns with the narrative that Bitcoin is increasingly behaving like a more mature asset class.
Fed Expectations Revive Market Confidence
The sharp cooling in volatility is closely linked to shifting expectations around the Federal Reserve’s December meeting. The probability of a 25-basis-point cut dropped to 39% just a week ago but has since surged to nearly 87%. This renewed dovish pricing has reduced demand for Bitcoin put options, signaling waning concerns about near-term downside risk.
On options platforms such as Deribit and Derive, short-term call-put skews have improved from the -7% to -10% range observed last week to around -5% today. While traders are still paying a premium for downside protection, the reduced skew highlights a significant decline in defensive positioning.
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