Bitcoin’s ascent to its all-time high unfolded against a very unusual backdrop: steadily compressing volatility. While most markets tend to exhibit rising implied volatility as prices push higher, Bitcoin has done the opposite, especially in recent months.
This behavior is perfectly captured by the Bitcoin Volatility Index (BVIV), a metric that tracks the implied volatility of Bitcoin over a fixed horizon based on options pricing.
BVIV is derived from the implied volatility surface of Deribit’s BTC options. Specifically, it calculates a time-weighted average of the 30-day implied volatility across a range of out-of-the-money puts and calls, adjusted for liquidity and skew.
Functionally, BVIV serves as Bitcoin’s version of the VIX: a real-time measure of expected volatility over the coming month. A higher BVIV reading implies that the market anticipates larger price swings, while a lower reading reflects expectations of calm.
Since September 2022, BVIV has ranged from a high of 96
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