BTCs volatility has attracted many options traders who hope to profit from the markets sharp fluctuations. However, historical data shows that BTC option buyers have suffered more losses, which is consistent with the trend of the traditional options market. This result is mainly due to the structural dynamics of the market, especially the relationship between implied volatility (IV) and realized volatility (RV).
Factors such as high implied volatility (IV) and time decay favor volatility sellers
On major options exchanges, BTC options are often priced at higher implied volatility. Analysis from 2021 to 2025 shows that BTCs 90-day implied volatility is 5.8 percentage points higher than the actual volatility on average. For example, when the market priced an implied volatility of 70%, BTCs actual volatility was about 64.2%. In other words, traders buy options priced at an implied volatility of 70%, but the final actual volatility is often only 64.2%.
To profit from buying options in the BTC market, traders must catch large movements that the market does not anticipate. However, accurately predicting the timing of these events is extremely difficult. If the market does not experience a significant volatility spike or directional breakout, most call and put options will approach zero value over time, ultimately resulting in losses for buyers.
BTC option buyers have a high rate of losses because they tend to overpay for volatility that is difficult to achieve. High implied volatility, time decay, and the scarcity of extreme volatility have greatly reduced the odds for option buyers. Although BTC remains one of the most volatile major assets, its options market structure still favors disciplined volatility sellers over speculative buyers.
Miners prefer to sell volatility to cash out, which makes more economic sense
Miners tend to sell volatility rather than buy options because selling options can bring in cash inflows, while buying options requires paying a premium, which leads to cash outflows. Since miners operations are highly dependent on capital investment and the volatility of BTC prices directly affects their profits, they are structurally more inclined to realize BTC volatility rather than spend money on expensive hedging tools. Unless miners expect a significant adverse change in BTC prices, it makes more economic sense to sell volatility and continue to collect option premiums than to buy options that may become ineffective protection.
How does MicroStrategy, which holds a large amount of BTC, earn profits?
MicroStrategy is one of the world’s largest corporate BTC holders, known for its aggressive BTC accumulation strategy. While still fully exposed to BTC price volatility, the company actively sells volatility at the corporate financing level, using convertible bonds and equity issuance to cash in on volatility in its stock market.
One of MicroStrategys primary methods of financing is through the issuance of convertible bonds. Convertible bonds are debt instruments that allow bondholders to convert bonds into MicroStrategy shares at a predetermined price. From the companys perspective, issuing convertible bonds is economically similar to selling a call option on its stock - a stock that typically trades at twice the value of its BTC holdings. By offering bondholders this upside potential, MicroStrategy is able to obtain funding at a financing cost that is far below traditional debt market rates. The embedded option allows bondholders to profit if the price of MicroStrategys stock rises significantly, meaning that MicroStrategy is selling equity volatility in exchange for upfront capital.
Disclaimer: The market is risky and investment should be cautious. This article does not constitute investment advice. Digital asset trading can be extremely risky and unstable. Investment decisions should be made after carefully considering personal circumstances and consulting financial professionals. Matrixport is not responsible for any investment decisions based on the information provided in this content.
