Bitcoin implied volatility below 40 for the first time: Sign for a bull run?

[d5000]

The BitVol trends lower and lower and has now marked a new all time low (remember that the index only exists since 2019):


Source

The previous record low was 43,93 and was reached in early January.

Option traders are as confident as never before (since 2019) that the current price is fair. This is in my opinoin a bullish sign or at least a sign that no crash is ahead, but of course external events could always change the picture.

[STT]

Volatility typical means down as many prices usually gain ie. the current action does not meet the overall trend seen over years.   True enough BTC has risen greatly but we all know it can fall harshly sometimes.  So BTC has greater volatility then most assets but cant be described in that way continually.  We sometimes go sideways like presently also which some find equal to a negative,  I dont as I think higher volume leads to confirmation at those prices and 30k could be an important area.
  My take for 2023 is that we'd not be positive especially, escaping the 2022 negative was a big thing but we are more shackled to old price action then allows us to bounce back in this volatility buoyancy kind of way.   We do have both pictures, the sideways indifference currently is us being caught between recovery and selling that must happen to honor old holders now wishing  (or requiring) to return back to FIAT cash.   I'm surprised more people dont cash out as the yield on Dollar rose alot and similar other currencies its a big headwind for any other asset to argue with.

[adaseb]

Yeah the range is just horrible. Basically when the weekly high or low breaks with volume and you are at the computer you can take a good trade out of it. The problem is that it’s still summer and there is a good chance it will just be another wick.

Look how bad the price action has been these past few weeks. Traders are just losing money trading this awful chop. Most likely until September it will trade this way.

[d5000]

For the first time in history, the BitVol index yesterday fell below 40. Today it fell even further and currently is at 38.22. That all with Bitcoin's price still keeps firmly in the 29-29.8k range.

See here.

I wonder if this is an opportunity to buy some Bitcoin options and selling them more expensively. Put options seem to be the natural choice if you believe the price will go up. But will it? I think it will, but I'm still not convinced there won't be still some sideways weeks ahead or even another dip, and in the option market, timing is important.

The EthVol index, tracking implied volatility for Ethereum, tracks even lower: at 36.37, also a record low. I wonder why, because traditionally the EthVol has been higher than the BitVol (for example, EthVol's 1-year high is around 110, while BitVol's around 92), and a lower volatility on BTC is also expectable due to BTC's higher trading volume (almost double). Perhaps people are expecting an "altcoin season" and thus altcoin buyers are (very slightly) more optimistic.

Historic volatility is also at a record low: the 30-day BTCVI is at 0,75%, for the first time beating the lows of early 2013 and early/mid-2016. This is however something I'm expecting, as the trend should in general move towards low volatility.

[adaseb]

Yeah the last few days is completely flatlined. There were many periods where you assumed there was some feed error because the prices weren’t changing.

Not only that but if you look at the time and sales the overall volume is just dreadful. Even don’t get too many trades which are greater than 1 BTC. Most likely will be like this to middle of September or early October. Unless there is some big event.

[YUriy1991]

Yeah, Having this kind of more data will give as a better sample to determine the pattern in long term. But since 2014 Bitcoin volume on exchange is damn small, I think the volatility that time will be off the chart and will messed when add to the current data. I remember Bitcoin price back then change more than 100% in a short period of time.

In my opinion, this is the impact of Macroeconomic problems and the crypto industry, as a result, the price of Bitcoin has fallen again and experienced a bear run. So the question is whether BTC has bottomed out and ended the bear run period? If BTC is able to breakout from that point, then we will get confirmation that the bottom has passed and is ready for the next bull run and always beware of the Bull Trap, of course.

[Davian144]

In my opinion, this is the impact of Macroeconomic problems and the crypto industry, as a result, the price of Bitcoin has fallen again and experienced a bear run. So the question is whether BTC has bottomed out and ended the bear run period? If BTC is able to breakout from that point, then we will get confirmation that the bottom has passed and is ready for the next bull run and always beware of the Bull Trap, of course.

The condition of the Bitcoin price today is still in an increasing condition to go to $ 30K again, although I would not consider that to be the end of the bears, because a decline in prices is still possible. But in the current conditions I am more confident that an increase to return to $ 30K is very possible and for the bullrun period it will probably be more visible in the next year, not this year although Bitcoin still looks stronger in the current price range with a more directional price bounce to the top.

[virasog]

Option traders are as confident as never before (since 2019) that the current price is fair. This is in my opinoin a bullish sign or at least a sign that no crash is ahead, but of course external events could always change the picture.

We all know that halving is near and, on every bitcoin move, you will say people saying that this is a bull season start time. They will link every bitcoin pump, dump or no volatility to the sign of the start of the bull season.

If we see the past data, we will see that there is a major bitcoin crash very near to halving, last time it was a covid crash. I am not saying that we will see another major crash before the start of the bull season, but we still cannot say that the bull market is officially started.

Seeing the price action, bitcoin needs a weekly confirmation over 32K and then we may say that we are in a proper bull trend.

[thecodebear]

Bitcoin has essentially been flat for the past 4 months (of course with some volatility in there from $25k-$31k during that period, but overall flat), so eventually yeah it'll break out, and probably fairly soon. I would guess it'll break out of this ~$30,000 range by end of August, maybe getting up to $35k in September. I'm expecting to see $40k get hit before the end of the year.

[d5000]

We all know that halving is near and, on every bitcoin move, you will say people saying that this is a bull season start time. They will link every bitcoin pump, dump or no volatility to the sign of the start of the bull season.

If we see the past data, we will see that there is a major bitcoin crash very near to halving, last time it was a covid crash. I am not saying that we will see another major crash before the start of the bull season, but we still cannot say that the bull market is officially started.

In my opinion, we have slowly to say goodbye to the halving incited cycles. IMO the bull run in 2019 was already a sign that halvings now don't matter anymore. But just the Covid crash you mentioned, clearly an external factor - the fears started already in January 2020, which had flattened the recovery after a bearish short-term trend in late '19 - may have prevented BTC from reaching an ATH before the halving in this occasion. It was very close: in 2019, almost 15000 were reached on some exchanges, and the ATH was lower than 20000.

I however agree with you that there's no need to become delusional just at every slight sign for a possible bullish move. However, the volatility data is at least ... very interesting (It's also a good long-term sign, we're clearly trending towards stabler prices again, which may be good for further adoption, after the 2022 volatility spikes.)

Seeing the price action, bitcoin needs a weekly confirmation over 32K and then we may say that we are in a proper bull trend.

I agree about the 32K as a major milestone, although I'm not a fan of weekly charts in a 24h/7d asset like BTC I'd change it to: "5 days above 32K and we're a step further" in the bull market.

Bitcoin has essentially been flat for the past 4 months (of course with some volatility in there from $25k-$31k during that period, but overall flat), so eventually yeah it'll break out, and probably fairly soon. I would guess it'll break out of this ~$30,000 range by end of August, maybe getting up to $35k in September. I'm expecting to see $40k get hit before the end of the year.

I could agree with that, but I think once we're past 35K volatility may go up again - to the bullish side. So if we see 35K in September, I believe we'll see at least 50 K (even if it's only a short spike) before the end of the year. 35K, or any value significantly over 32K, would break all MAs and EMAs to the upside, so the impression of the general public will be that Bitcoin left the problems of 2022 (FTX, Terra/Luna) behind and the community is optimistic again.

[BenCodie]

Yeah the range is just horrible. Basically when the weekly high or low breaks with volume and you are at the computer you can take a good trade out of it. The problem is that it’s still summer and there is a good chance it will just be another wick.

Look how bad the price action has been these past few weeks. Traders are just losing money trading this awful chop. Most likely until September it will trade this way.

If anyone is trading, there is still the possibility to make money through good limit order discipline however it would take a long time to get a return, and it would be a true test of patience. If I were to speculate, a drop is imminent. The price never stabilizes in this way before a rally, usually there is a sharp dip to liquidate longs, followed by a quick rebound upward.

It is possible that the ETF and the EDX market news was just to provide more liquidity for the year, as whales sell-off prior to another dump, then when all of the infrastructure is ready the run will continue again. I also suspect a covid-like event to spark the next run too, and more accelerated. As people won't buy into it again and instead, will be angry at the tyranny behind it.

[19Nov16]

Since March when the price touches $ 30k, many are optimistic that the price of $ 50k will be easily achieved before June, now it is August and the price looks difficult to rise, even in May the price has dropped below $ 25k, and we hope that the market will improve soon so that Bull Run will soon occur.

[d5000]

In a sudden turn, the BitVol index jumped 10% up to 44. And that without the Bitcoin price leaving the current range of 28.6-32k - it's even still in the "inner" range of the sideways channel, 29-30K.

I can only speculate on the reasons. (Remember, the BitVol index is calculated using option prices, so if options are cheap, the index has a low value. I write that because in many of the previous posts the topic switched to "historic", i.e. "realized" volatility, not implied volatility).

First, there was a small, but relatively sudden price increase yesterday. This could have "waked up" the people trading on option markets, and remembered them that we're still not registering Forex volatility values

This could be a bullish sign: People could be buying call options, to be able to buy BTC cheap if it goes up.

Second, Glassnode has published a newsletter recently, where they speculate about option prices being undervalued:

Volatility Crush

Bitcoin prices are infamously volatile, however the market is currently experiencing an extreme volatility compression. Whilst options markets reflect this, it suggests that Bitcoin is either no longer infamously volatile... or volatility could be mispriced.

Source: https://insights.glassnode.com/the-week-onchain-week-32-2023/

Volatility "mispriced" refers to options being "too cheap". Of course, if a major Bitcoin analysis firm publishes such an opinion, this could have implications on the real options market: people now could be buying options, realizing that there may be an opportunity if they really are "mispriced".

By the way, the "realized" volatility stays very low at 0,79% according to the Bitcoin Volatility Index.

[Davian144]

Since March when the price touches $ 30k, many are optimistic that the price of $ 50k will be easily achieved before June, now it is August and the price looks difficult to rise, even in May the price has dropped below $ 25k, and we hope that the market will improve soon so that Bull Run will soon occur.

Right now the Bitcoin price range in the market is also still around $30K and even less, but for the optimists most of the people who believe will see a price of $50K in Bitcoin may only be for the end of this year or before the halving occurs. Because the bull run probably won't happen in the near future, but expecting an increase before the halving I don't think it would be wrong either, because with that kind of expectation I think it will encourage some people to continue buying before the price increase occurs.

[YUriy1991]

By the way, the "realized" volatility stays very low at 0,79% according to the Bitcoin Volatility Index.

Yes, it is true, Bitcoin volatility is pro-cyclical and nowadays Investors may have lost faith in institutions like governments and central banks and turned to Bitcoin as a safe haven, but, nowadays it is a bit difficult to understand Bitcoin price fluctuation even though we know the volatility of the US stock market has an effect on the long-term volatility of Bitcoin. indeed, if we also look at Google Trend regarding the index spike Volatility is closely related to coinciding with major events, both positive and negative in the money market.

[el kaka22]

Definitely a sign for a bull run, doesn't guarantee that it will be a bull run, but it does make it look a lot more like it is going to happen. This is why we should be a bit more careful about what we are doing, and should focus on what the result could be.

I understand that it is not going to be simple, but we need to make sure that things go easier for us on the long run as well. I get it, it is not simple and I really do get it, but that doesn't mean that we need to make sure that we are ready for anything. The bull run is not that easy and that should not be that simple and we should be ready for both going up and going down and if we are ready for both of it then we should be considering the situation according to how it goes.

[d5000]

BitVol turned down again in the last days and now we've seeing the almost incredible value of 36.4 (the last low was 37.08). I guess thus the short but hefty increase I reported in my last post had to do with the slight BTC/USD price increase some days ago.

It has been speculated that another sign for an incoming bull run are long positions taken by some Bitcoin whales. For now, I still think a dip down to 28K is possible due to "sideways market fatigue", but there are quite many signs that the mid-term outlook looks quite positive for Bitcoin's price.

BTW: It would be cool if some people with knowledge on options prices could comment on the question: do you think Bitcoin's volatility is currently mispriced?

[adaseb]

Today the Bitmex 24H volatility index hit a new all time low. Basically Bitcoin has never traded in such a tight range ever.

If it wasn’t for all these KYC exchanges then perhaps one could buy some calls/puts and bet on this volatility to explode some day. Most likely sometime in the fall. However we have no idea knowing which way it will breakout.

[Joshapat]

Of course we hope the bull run comes soon, I would like to see this year close at least $60k so that makes a good start for the bull run which will be in 2024 when the halving day happens, when prices are as cheap as they are now then a good opportunity to buy.

[kamvreto]

Of course we hope the bull run comes soon, I would like to see this year close at least $60k so that makes a good start for the bull run which will be in 2024 when the halving day happens, when prices are as cheap as they are now then a good opportunity to buy.

Whatever the current price is certainly a good opportunity to buy. We are still half the price for the last ATH and a chance to collect bitcoins before the halving is reached. Hopefully near or after the halving we will enter into the bull run market that everyone has been waiting for. Those who start entering will have a great opportunity to benefit than those who just delay entering without doing anything. Year-end price target might be him over $40k and that's still pretty reasonable, we're still seeing bitcoin in the $29k-$3k price area today but that's about to jump high soon, looking forward to the best for bitcoin.