Bitcoin Volatility Index Hits All-Time Low on Deribit

Crypto options exchange Deribit may have reasons to believe that the near future holds some positives for Bitcoin (BTC). This follows after the exchange’s Bitcoin volatility index recently reached its lowest level since 2021.

The index is a measure of the degree of fear that crypto users have in Bitcoin. And by a larger effect, may also indicate an absence of price volatility for BTC in the near future.

Bitcoin Volatility Index Suggests a Near-Steady Next 30 Days for BTC Price

DVOL is the Deribit Implied Volatility Index. It tracks the degree of volatility that is expected of a crypto asset over the next 30 days. In other words, the index shows how confident or negative investors are about a crypto’s price turbulence.

As earlier mentioned, the current implied volatility level is Deribit’s lowest since launching in 2021. However, it is also the lowest level in crypto’s entire history, according to the DVOL algorithm.

Interestingly, the crypto derivatives analytics platform Greeks Live has also shared a similar index. On Monday, July 24, Greeks Live noted that the volatility index for both Bitcoin and Ether (ETH) combined has fallen to 37%. This represents a multi-year low, according to the platform. The analytics firm also explained further that continued low liquidity has severely affected implied volatility (IV) levels for Bitcoin. It wrote:

“It is an indisputable fact that the overall volatility of cryptocurrencies is declining, which will inevitably force the implied volatility of cryptocurrencies to keep going to new lows.”

By implication, the implied volatility levels mean that derivatives traders do not see any major price shake-ups happening in the interim. And there is also the belief that crypto markets may not see any major activity, at least, for the next few months.

For what it’s worth, crypto markets appear to have been in a restful state since mid-March. Its total capitalization goes back and forth around the $1.2 trillion mark and there has been little to no significant change from this level.