The crypto derivatives market has grown so big in the past few years that it can be used as an indicator of future price movements. Bitcoin options have captured the crypto industry and have quickly turned into mature products whose movements have the power to sway the rest of the market.
Just like in the traditional financial market, Bitcoin options grant their holders the right, but not the obligation, to buy BTC at a preset price at the contract’s expiration date. Options are usually priced using a metric called implied volatility (IV), which shows the market’s view of the likelihood of changes in a given security’s price.
Implied volatility (IV) is often used by investors to estimate future volatility in a security’s price. However, while IV can predict price swings, it can’t predict the direction in which the price will go. High implied volatility means there’s a high chance of a large price swing, while low IV means that the price of the underlying asset most likely w
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