Bitcoin Implied Volatility Drops to 38% Ahead of Potential Surge
Bitcoin (BTC) is showing signs of potential volatility in October, following a pattern from 2023. Currently, it trades between $110,000 and $120,000, reducing volatility expectations.
- The Volmex Finance's BVIV index indicates a drop in 30-day implied volatility (IV) to an annualized 38%, down from 41% in late August.
- This trend approaches the two-year low of 36%, reached four weeks ago.
- Implied volatility reflects market expectations of future price movement based on option pricing.
- A similar IV decline occurred in summer 2023, dropping from about 50 to 35 before Bitcoin's price rallied from $25,000 to $46,000 by year-end.
- Historically, October may be the inflection point for volatility surges, as fourth quarter typically shows strong performance with average gains around 85%.
The current compression in volatility suggests that future price movements may be underestimated by the market.