Bitcoin Volatility Hits Multi-Month Low as Traders Hedge Against Price Drops
Bitcoin volatility has hit a multi-month low, but traders remain cautious and are hedging against potential price drops.
The Volmex Bitcoin Volatility Index (BVIV), which tracks 30-day annualized implied volatility, dropped to 35.59% over the weekend, its lowest reading since September.
This decline in volatility is largely attributed to a supply-demand imbalance in Bitcoin options, with demand for bets on major price movements weakening as the cryptocurrency remains range-bound between $62,000 and $66,000 since early July.
However, despite the low volatility, options pricing suggests investors have not dismissed the possibility of another significant market downturn. In fact, put skew remains elevated, meaning investors are paying more for put options that protect against falling BTC prices than for comparable call options.