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Bitcoin volatility may surge, hinting at downside risk

CoinDesk points to bitcoin’s 30-day implied volatility index hovering around 34% to 38%, a range that has previously preceded sharp price drops.

Reported · Written up by our desk · Market Structure

CoinDesk says bitcoin may be setting up for a potential “volmageddon,” a volatility surge often associated with price declines. The outlook is tied to bitcoin’s 30-day implied volatility index, BVIV, which is used as a crypto analogue to the VIX and reflects demand for options used to hedge sudden moves.

The BVIV is currently hovering between 34% and 38%. CoinDesk notes that in past instances when the index fell in this zone, volatility increased afterward and bitcoin prices dropped quickly, including a move from about $74,000 to under $60,000 in less than a week after a similar reading in late May.

CoinDesk adds that the index is trading below both its 30-day and 200-day simple moving averages, implying volatility is relatively “cheap” and could rise again. Bitcoin is currently trading just above $64,000 and has remained range-bound since last Wednesday, while the newsletter also references mixed volatility signals from traditional markets including South Korea’s KOSPI VIX above 70%.

Latest closeBitcoin $64,960.82 ▲0.1%|VIX 15.15 ▼4.2%|Kospi 6,300.10 ▼4.5%

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