Bitcoin Option Implied Volatility Drops to Low Levels, Analyst Suggests It May Signal Major Price Swings

Odaily Planet Daily News Murphy stated that the implied volatility of Bitcoin options is currently extremely low, with 1-week IV at 33% and 1-month IV at 34%, both below the historical range of 40%, which may indicate significant market volatility. According to Murphy's statistics, similar situations have occurred twice in the past year: in early January, after IV dropped below 40%, BTC fell from $97,000 to $62,000 within 15 days; in late April, after IV fell below 40%, BTC fell from $82,000 to $60,000 within 14 days; and after June 15, BTC fell from $66,000 to $58,000. Murphy pointed out that low IV is related to market consensus, the accumulation of volatility arbitrage funds, and the short gamma mechanism of market makers, which may amplify the impact of unexpected events, and reminded contract traders to be prepared.