Bitcoin’s implied volatility spiked sharply this week, with Deribit’s DVOL index jumping from about 37 to above 44 as markets sold off. The spike came as markets digested renewed macro uncertainty, including rising government shutdown risks and fresh political noise around the future leadership of the Federal Reserve. Volatility also climbed in traditional markets, with the VIX rising in parallel, reinforcing the sense of a broader risk-off move rather than a crypto-only event.
Despite the spike, bitcoin’s implied volatility remains far from extreme when viewed in historical context. Deribit data shows bitcoin’s IV Rank at 36, meaning current implied volatility (a market-driven metric representing the expected future volatility of an asset’s price) sits only modestly above its lowest levels from the past year. IV Percentile stands near 50, suggesting bitcoin’s volatility has been lower than current levels about half the time over the last 12 months. In plain terms, volatility jumped fast, but it is not stretched yet.
That matters for traders. A rising DVOL tells options markets expect larger price swings ahead, even if spot prices appear to stabilize. Options markets are signaling caution rather than panic after more than $1.7 billion in bullish crypto positions were liquidated, underscoring fragile positioning and expectations for more turbulence ahead. When prices broke lower, forced selling did the rest.
Leave a Reply