Bitcoin volatility jumped sharply during Thursday’s steep selloff as traders scrambled to buy downside protection, though options markets suggest stress levels remain below extremes seen over the past year.
Deribit’s bitcoin volatility index, known as DVOL, surged from roughly 37 to above 44. Often compared with Wall Street’s VIX, DVOL measures the level of price movement traders expect over the next 30 days based on options pricing. A rising DVOL signals that investors are paying more for protection, driving options premiums higher and reflecting rising uncertainty.
The move higher in volatility came as markets absorbed renewed macro risks, including growing concerns about a potential U.S. government shutdown and fresh political uncertainty around the future leadership of the Federal Reserve. Volatility also increased across traditional asset classes, with the VIX climbing in parallel, pointing to a broader risk-off environment rather than a crypto-specific shock.
Even so, bitcoin’s implied volatility remains relatively contained in historical terms. Deribit data shows an IV Rank of 36, indicating current implied volatility sits only modestly above its lowest levels from the past year. IV Percentile is near 50, meaning bitcoin has traded at lower volatility roughly half the time over the past 12 months.
Put simply, volatility has risen quickly, but it has not yet become stretched.
That nuance is important for traders. Elevated DVOL suggests options markets are bracing for larger price swings ahead, even if spot prices stabilize. Metrics such as IV Rank and IV Percentile help traders assess whether options are expensive or cheap relative to recent history, shaping decisions around hedging strategies, leverage, and overall risk exposure.
For now, derivatives markets are flashing caution rather than panic. Still, with more than $1.7 billion in liquidations and long-heavy positioning unwound across exchanges, the volatility spike highlights how fragile market positioning had become. Once prices broke lower, forced selling accelerated the move.
The signal from options markets is straightforward: bitcoin has exited a period of calm. Traders are preparing for more turbulence ahead, with some now targeting the $70,000 area in the weeks to come.
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