Bitcoin · Wall Street · CoinDesk
Put simply, that means professional traders are less interested in blunt “buy volatility” bets and more focused on profiting
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According to Himashu Sahay, the chief technology officer and a co-founder of bitcoin-backed lending platform Arch, declining volatility expectations create a false sense of security.
Key facts
- The current BVIV level is a sharp slide from early February, when it spiked above 90% as bitcoin tumbled from $90,000 to nearly $60,000 and traders rushed into options to hedge against violent price
- The bitcoin price has held between $62,000 and $66,000 since early July
- Bitcoin’s BTC $ 64,978.27 price has stopped falling in recent weeks, and while it looks as though options traders aren’t expecting any big moves in either direction in the next few weeks, protection
- The metric, a crypto analog to the Cboe Volatility Index (VIX), which measures implied volatility in U.S. equities, is, like its Wall Street equivalent, known as a ‘fear index’ because options
Summary
Bitcoin’s volatility index, BVIV, fell to 35.59% over the weekend, the fear gauge’s lowest level since September. Demand for options that bet on big price swings has dried up even as miners and corporates keep selling options through overwriting strategies, flooding the market. Despite low overall volatility, downside insurance remains expensive. Bitcoin’s BTC $ 64,978.27 price has stopped falling in recent weeks, and while it looks as though options traders aren’t expecting any big moves in either direction in the next few weeks, protection against declines is still not cheap. The bitcoin price has held between $62,000 and $66,000 since early July.