Bitcoin Options Market Shows Low Volatility Expectation Amidst Price Action

Bitcoin options markets indicate low volatility expectations, which historically precede significant price movements.

Trends in Bitcoin Options ATM IV

Recent reports from Glassnode show a declining trend in Bitcoin Options At-The-Money Implied Volatility (IV).
ATM IV measures expected future volatility based on options pricing, particularly for contracts with strike prices closest to the current market price.
The downward trend suggests traders anticipate minimal near-term volatility.
Historically, such low volatility has often been followed by sharp market movements, serving as a potential contrarian indicator.
A similar drop in ATM IV occurred in 2023, leading to a subsequent bullish rally.

Additionally, Deribit’s DVOL index, which tracks a 30-day IV measure for all strike prices, has also reached historically low levels. Currently, only 2.6% of trading days have seen lower values.

This reflects market complacency and limited demand for hedging against large moves, leaving the market vulnerable to sudden volatility spikes.

Current BTC Price

Bitcoin is trading around $121,600, up 5% over the past week.