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In the first ten chapters of the of the Saga of the Volsungs, Odin strongly favors the eponymous clan. In chapter 11, however, the Allfather sides with King Lyngi and attacks Sigmund, shattering the same sword he had gifted Volsung's son earlier in the saga:

But now whenas the battle had dured a while, there came a man into the fight clad in a blue cloak, and with a slouched hat on his head, one-eyed he was, and bare a bill in his hand; and he came against Sigmund the King, and have up his bill against him, and as Sigmund smote fiercely with the sword it fell upon the bill and burst asunder in the midst: thenceforth the slaughter and dismay turned to his side, for the good-hap of King Sigmund had departed from him, and his men fell fast about him; naught did the king spare himself, but the rather cheered on his men; but even as the saw says, "No might 'gainst many", so was it now proven; and in this fight fell Sigmund the King, and King Eylimi, his father-in-law, in the fore-front of their battle, and therewith the more part of their folk.

Source: The Story of the Volsungs, translated by William Morris and Eirikr Magnusson

Why the sudden change of heart?

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I've always taken the answer to this to fall somewhere in between, on the one hand, the fact that Óðinn [Odin] is a trickster figure and, on the other hand, the apparent cultural expectation of the Norsemen that the most desirable way to die would be in battle in order to spend one's afterlife with Óðinn in Valhalla, training for the Ragnarök.

Óðinn's trickster aspect appears to me to manifest in Sigmund's youth as well as in his old age. Óðinn has a cameo at these critical points in the life of this great-great-grandson of his. In both instances, before Óðinn shows up, things are going well enough, but the net result of each encounter is basically disaster for Sigmund, although in the first instance it is more indirect.

In Chapter 3 of the Völsunga saga Óðinn chooses a strange way to gift Sigmund with a magic sword at the wedding feast of Sigmund's sister Signy to the Geatish king Siggeir. Óðinn sticks the sword into the Barnstokk, a tree around which the feast hall of Sigmund's and Signy's father Völsung has been built, saying that the person who can pull the sword from the tree will own this weapon, and only Sigmund succeeds at this task. This eventually leads to the death of almost every member of Sigmund's family because he refuses to hand the sword over to his new brother-in-law.

Based on Óðinn's character as a prophet in other stories, it would seem that the god knows all this will happen when he sticks the sword into the tree. (Or, at the very least, none of it takes him by great surprise.) The only reason of which I can think for him to present Sigmund with the gift in this manner is in order to create strife at this wedding feast (whose bride, the same chapter tells us, actively hates her groom from the moment he requests her hand in marriage).

If Óðinn is intentionally sowing discord which will end in the kind of brutality that it does for the Völsungar, perhaps there is redemptive logic therein in that he is essentially a war-god and is seeking among his descendants the most powerful warriors to add to his collection of Einherjar (the dead "Lone Fighters" housed in Valhalla).

Thus, in this way, Óðinn is manipulating the course of his great-great-grandson's life in order to lead him to this final moment in which he will die as a warrior in order to join the ranks of those who shall fight on the side of the gods in the Ragnarök. If that is plausible then it should explain how Sigmund's life ends, and Óðinn's involvement in the scene, which therefore is more of a blessing than a forsaking.

Sigmund's own perspective on the matter is perhaps somewhere in between seeing it that way and simply being resigned about it just being "his time" and "God's will."

The night after the battle, Hjordis went out to the men who had fallen, came to the spot where King Sigmund was lying, and asked if he could be made well again.
'Many have recovered when there was little hope,' he answered. 'But my good luck has turned and so I do not wish to be made well. Odin does not want me draw sword, for now it lies broken. I have fought battles while it was his pleasure.'
Chapter 12 - Vǫlsunga Saga: The Saga of the Volsungs, Edited & Translated by R.G. Finch

(A potential hole in this hypothesis is that, strictly speaking, Sigmund technically does not die in battle; he merely succumbs to injury.)

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Chapter 3 of the Volsungs Saga:

The tale tells that great fires were made endlong the hall, and the great tree aforesaid stood midmost thereof, withal folk say that, whenas men sat by the fires in the evening, a certain man came into the hall unknown of aspect to all men; and suchlike array he had, that over him was a spotted cloak, and he was bare-foot, and had linen-breeches knit tight even unto the bone, and he had a sword in his hand as he went up to the Branstock, and a slouched hat upon his head: huge he was, and seeming-ancient, and one-eyed. So he drew his sword and smote it into the tree-trunk so that it sank in up to the hilts; and all held back from greeting the man. Then he took up the word, and said-- "Whoso draweth this sword from this stock, shall have the same as a gift from me, and shall find in good sooth(truth) that never bare he better sword in hand than is this."

Odin had originally traveled in disguise and stuck the sword into the tree himself. After many others tried, Sigmund was the only one to be able to pull the sword from the tree.

In Chapter 11

Now was that battle fierce and fell, and though Sigmund were old, yet most hardily he fought, and was ever the foremost of his men; no shield or byrny might hold against him, and he went ever through the ranks of his foemen on that day, and no man might see how things would fare between them; many an arrow and many a spear was aloft in air that day, and so his spae-wrights wrought for him that he got no wound, and none can tell over the tale of those who fell before him, and both his arms were red with blood, even to the shoulders.

Odin is coming to take the sword back to give it to someone else. Sigmund attacks Odin and Odin shatters his sword(this being the "mortal blow" I was referring to). The sword was what gave Sigmund his abilities and having it broken was fating him to death. It's vague to mention whether Sigmund knew it was Odin or not. Although Odin being in disguise might suggest that Sigmund had no idea who it was.

Odin doesn't need a reason. The belief at the time was that fate wasn't something that men could control, that was what the Norns and Völva did. It was nothing more than Sigmund's time. He had lived a long life and had many great accomplishments and it was time for the sword to be passed on.

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