Bitcoin Implied Volatility Plummets To Pre-Bull Market Levels: What This Means
January 19 2022 - 6:00PM
NEWSBTC
Bitcoin has sharply declined in the past month which has dragged it
down to the $40K price point. The digital asset’s downtrend had
then promptly dragged their metrics like implied volatility down
with it. This decline has been even sharper as bears have gotten a
tighter grip on the market. For some, this could be bad news.
However, for others, it could mean a period of opportunity. Bitcoin
Implied Volatility Crumbles Bitcoin’s implied volatility is a
metric that is used to illustrate investor expectations of future
price volatility of the digital asset going forward. This metric is
not only prominent in the crypto space but is used across a number
of actives to map out investor expectations over time when it comes
to volatility. If this metric is high, then investors are clearly
expecting price volatility to be on the high side going forward,
which is why this is an important metric for investors, especially
those invested for the short term. Related Reading | Bitcoin
Millionaires Are Flocking To This North American Tax Haven. But
What Do The Locals Think? For bitcoin, implied volatility has been
on a steady downtrend since the end of 2021. This follows the price
movements which have also recorded a similar downtrend in its
value. The implied volatile downtrend however ramped up even more
at the beginning of this year. It is important to note that low
implied volatility (IV) for bitcoin is uncharacteristic, hence why
it is important. BTC implied volatility declines | Source: Arcane
Research With such low levels, volatility bets become a more
attractive venture for bitcoin where they can buy call and put
options. One thing about low IV levels for bitcoin is that they
tend to extend for a Lon time. An example of this is the low IV
levels recorded in June 2020 that lasted for six months into
December 2020. Bitcoin’s IV is being impacted by a number of
factors, including decentralized finance (DeFi) innovations that
are popping up around the corner. BTC Price Movements Bitcoin has
been moving more or less erratically over the past few months.
After hitting its peak of $69K, the digital asset had gone a
consistent descent that saw it lose over 30% of the all-time high
value. Additionally, the digital asset high is known to be a market
mover has dragged the market down with it, losing about $300
billion off its own market cap in the process. Related Reading
| What’s In Store For MicroStrategy Going Forward? CEO Michael
Saylor Reveals Bitcoin has however held strong above the $40K
point. The digital asset continues to show strong support at this
point, suggesting that this is the point for bulls to hold and for
bears to beat. BTC at $42K | Source: BTCUSD on TradingView.com In
the last 24 hours, the price of BTC has grown from the low $41,000
to above $42,000, adding about $1,000 to its value just as the
markets begin to open for midweek trading. The price of the digital
asset is currently trending at $42,300, with indicators pointing
towards a retest of the $42,500 resistance point. Featured image
from Binaryx, charts from Arcane Research and TradingView.com
TRON (COIN:TRXUSD)
Historical Stock Chart
From Aug 2024 to Sep 2024
TRON (COIN:TRXUSD)
Historical Stock Chart
From Sep 2023 to Sep 2024