A BTC price volatility surge may be brewing, key indicator suggests
By Omkar Godbole from CoinDesk
Traders may want to keep a close eye on the potential for a bitcoin “volmageddon,” in other words, a volatility surge that is often accompanied by price declines.
This cautionary outlook is based on the behavior of bitcoin’s 30-day implied volatility index, BVIV. Frequently viewed as the crypto equivalent of Wall Street’s VIX, the gauge is influenced by demand for options, the derivative contracts traders use to protect their portfolios from sudden market swings. Generally, the higher the demand for these contracts, the higher the implied volatility and vice versa.
For now, the index is hovering between 34% and 38%, a range that in recent years has been followed by a volatility boom and a price slide.
For instance, the index reached this zone in late May. What followed was a drop from $74,000 to under $60,000 in less than a week, and an upswing in the BVIV. A similar pattern played out just before the early February crash and during the correction following the record highs reached in October.
