Hong Kong’s financial regulators cautioned investors to avoid making impulsive bets on stablecoin-linked assets after a spate of sharp price swings tied to speculation, corporate announcements, and unverified claims about licensing plans in the city.

In a joint statement, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC) said they had observed abrupt movements in share prices of companies linked to the stablecoin concept.

These shifts often followed news reports, social media posts, or statements suggesting that firms planned to apply for a stablecoin issuer licence, engage in related activities, or explore such initiatives locally. Some claims referenced discussions with the regulators themselves.

High bar for stablecoin licensing

Hong Kong introduced its stablecoin licensing regime earlier this year as part of a broader push to establish the city as a regulated hub for digital assets.

The HKMA said it applies a “rigorous and prudent” approach to reviewing applications, with stringent approval criteria and an expectation that only a small number will be granted in the initial phase.

HKMA Chief Executive Eddie Yue said dozens of parties have engaged with the regulator about licensing, but stressed that early communication and simply filing an application are not indicators of likely approval.

The process includes meeting capital, governance, risk management, and operational requirements designed to ensure the safety and stability of licensed stablecoins.

Investors cautioned

The SFC urged investors to remain clear-headed, conduct thorough research, and avoid decisions based solely on short-term price momentum or unsubstantiated online claims. It warned that volatility driven by hype could expose retail traders to significant losses.

SFC Chief Executive Julia Leung said the regulator will continue to monitor trading closely through its dedicated market surveillance team, which uses advanced systems to detect and investigate potential manipulation. She added that the agency intends to take strict enforcement action against any deceptive or misleading conduct.

The regulators also reminded companies and market participants to avoid making public statements that could mislead investors or create unrealistic expectations, noting that maintaining transparency and accuracy is critical to safeguarding market integrity during the rollout of Hong Kong’s stablecoin framework.

Bitcoin’s (BTC) overnight push towards fresh records met with profit-taking on Monday, knocking prices down to $118,500.

The pullback left bitcoin 2.8% off its session high of $122,200, though the largest crypto remained up 0.4% over the past 24 hours.

Ether held above $4,200, modestly up 0.8% during the same period, while major altcoins Solana’s SOL (SOL), dogecoin

and Sui’s native token (SUI) slipped 3%-4%.

James Van Straten, senior analyst at CoinDesk, noted that bitcoin’s weekend rally left a gap in the CME futures market, which trade only on weekdays, between Friday’s close at $117,430 and Monday’s open at $119,000. History suggests that BTC could pull back to revisit and “fill” that gap, he said.

Tuesday’s U.S. Consumer Price Index (CPI) report could be the week’s biggest catalyst for traders, with Producer Price Index (PPI) data following later in the week.

Whether bitcoin’s momentum continues will likely depend on those U.S. macroeconomic data reports, Bitfinex analysts said in a Monday market report.

“With market sensitivity to macro events running high, traders should prepare for increased volatility and the possibility of a retracement toward $110,000 in the near term,” the Bitfinex analysts wrote.

“We believe that the ranging conditions and oscillation between the range highs and lows will continue, since price is constantly moving above and below the cost-basis of fresh buyers allowing for charged sentiments around key macro data releases,” they added.

Read more: Watch Out Below: Bitcoin’s Weekend Surge Leaves CME Gap

Outgoing Commodity Futures Trading Commissioner Christy Romero warned the American public about potentially growing market uncertainty on May 27, following regulatory changes at the CFTC under the new Trump administration.

Romero Pushes for Clear, Consistent Regulation

While giving her farewell remarks at The Brookings Institution in Washington, D.C., on Thursday, Romero expressed concerns that the current trend of “big swings” between “regulation and deregulation” could ultimately hinder the success of the nation’s financial markets.

“As the current administration pursues a deregulatory agenda in the name of growth, care should be taken not to remove the load-bearing resilience built into markets—resilience that has resulted in financial stability and protected our economy,” said Romero.

“Growth requires a regulatory environment where markets are financially stable and resilient during times of volatility, uncertainty, and stress,” she added.

Romero further urged regulators to “follow a steady, consistent path” in hopes of creating “a resilient, stable, and robust financial system and economy.”

“It’s a really tough challenge—one that requires independent regulators engaging with each other on a bipartisan basis and engaging with many stakeholders who use and need U.S. markets,” she said. “I plan to continue to share my voice, and I will always be rooting for the CFTC.”

Trump’s Crypto-Friendly Pick to Lead CFTC Unveiled

Romero’s final CFTC speech comes after she announced that she would step down in February following news that U.S. President Donald Trump would tap former commissioner Bryan Quintenz to lead the agency.

Romero is the fourth CFTC official set to step down in recent months, with fellow commissioners Christy Goldsmith, Caroline Pham, and Summer Mersinger slated to depart the agency as the Trump administration continues its deregulatory efforts across the crypto sector.

With over $3 million held in digital assets, Quintenz is largely viewed as a crypto-friendly pick to lead the CFTC and is expected to begin his new role sometime this summer. Romero’s final day at her current position is scheduled for May 31.

Realized volatility is crucial because it captures actual market risk and helps investors gauge whether price movements align with their risk tolerance. It also reveals when markets are stressed, as large price swings drive up volatility.

Since the beginning of March, Bitcoin has seen a turbulent market characterized by rapid price swings. Coming off a severe late-February sell-off, the opening days of March saw Bitcoin stage a dramatic rally followed by an equally sharp pullback. These abrupt movements caused realized volatility to rise significantly.

The rapid ups and downs in early March fueled a sharp surge in one-week realized volatility. Traders observed some of the most significant single-day percentage changes in months, leading short-term volatility measures to climb well above normal ranges. As major price fluctuations continued, two-week and one-month realized volatility measures also rose. Longer-term metrics tended to capture the combined volatility of February’s sell-off and March’s rebound, driving them upward.

While volatility peaked in the first three days of March, it gradually fell as the market tried to stabilize. The one-week reading slightly declined, reflecting somewhat calmer price action, though broader volatility remained higher than in earlier months.

Bitcoin exhibited the classic pattern of volatility clustering—a quiet period followed by a storm. Before the late-February collapse, Bitcoin’s price had been relatively stable (volatility was low through January and early February). This calm was abruptly broken by late February’s crash, which led to a regime of high volatility that carried into March.

Historically, low volatility lulls often precede sharp spikes in crypto and traditional markets. In this case, weeks of consolidation were followed by the most volatile episode in months, validating the idea that stability can breed instability as market pressure quietly builds and then releases.

By definition, realized volatility is derived from price movements, so it’s no surprise that the spikes in realized vol coincided with sizeable daily price swings. However, it’s worth noting the symmetry: the volatility surged regardless of the price direction. In early March, one day’s extreme rally and the next day’s steep plunge both contributed to the volatility spike. This underlines that realized volatility measures magnitude, not whether moves are 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 7-day volatility off the charts. Traders saw that periods of high realized volatility corresponded precisely to the days of frantic trading and big candles on the price chart.

Whenever Bitcoin’s daily candles expanded (long wicks/bodies indicating significant intraday ranges), the trailing realized volatility metrics rose in tandem. This tight correlation held throughout March: when price movements calmed, short-term volatility measures also fell.

These extreme fluctuations signaled significant market stress. As negative sentiment and selling pressure emerged in late February, shorter-term realized volatility spiked. This reinforced that high volatility typically indicates heightened risk.

Concerns surrounding a new wave of trade disputes helped trigger the late February drop and continued influencing March markets. Investors fled riskier assets like Bitcoin amid renewed uncertainty, contributing to the heightened volatility.

The anticipation surrounding a White House summit on crypto, plus speculation about governmental actions regarding its proposed crypto reserve, added to the market-wide anxiety. Bitcoin is highly sensitive to regulatory signals, so any potential changes in stance further fanned volatility.

Tracking realized volatility can provide early warning of changing market regimes — in this case, the eruption of volatility confirmed a regime shift from bull-market complacency to turbulent correction. Second, comparing price action with realized volatility helps identify extraordinary moves.

In March, the fact that 1-week volatility exceeded 100% indicated that the price swings were not just large — they were historically significant for Bitcoin. It also showed that Bitcoin does not trade in isolation. Events like policy changes, economic data, and global crises directly feed into its volatility. March 2025’s volatility resulted from crypto-specific factors and external shocks (like tariffs and regulatory shifts).

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