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

[LFC_Bitcoin]

We’ve been consolidating in a really tight range for what feels like an eternity. Would be really good if we break out to the upside soon. There are murmurings of extreme downside in legacy markets soon though. Big Short Michael Burry recently shorted stocks with over 90% of his net worth (does he know something?). Hopefully bitcoin doesn’t follow stocks if that is the case, problem is though it usually does.

https://amp.cnn.com/cnn/2023/08/15/investing/michael-burry-stock-market-crash/index.html

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[FanEagle]

I am sure that to people like me everything is a sign for a bull run. I get that some stuff do not mean anything and maybe this doesn't mean anything neither, but at the end of the day if this means that we are going to end up with a profit the new are going to end up with a profit. That's how it happens and we should be considering it as a profitable thing. Obviously not everything works that way, sometimes it goes down as well, and these type of things causes it to drop lower.

But considering the volatility is low, that means even just a small spark could cause a huge fire for bitcoin to go up. This is why we need that little part to start it all, and we are waiting for that to start soon enough, it should probably happen soon.

[d5000]

Volatility is on the rise again. Even before the dip yesterday, the BitVol went up to 43 (which was still a low value). Until now there was no further update, but I expect it now to be close to 50.

However, what I would like to discuss is if the theory that volatility is currently "mispriced" on option markets which was brought up by Glassnode and I commented some days ago, could have favoured the deep flash crash which in some exchanges even went lower than $25000.

If put options were very cheap, then this was an opportunity to abuse it in a way very similar to a short:

1. Buy put options (Put options are those allowing you to sell Bitcoin for a fixed price, the so called "strike price".). When the BTC price was at 29000-30000, you should have been able to buy put options with a strike price of $28000 or so for cheap.
2. Wait for bad news, then join forces with other whales which created short sales, and dip the price.
3. Sell the (much higher priced) options.

Should yield a quite good profit, perhaps more than in a "regular" short sale operation.

[Pejoh Asu]

I think Bull Run will occur when the end of the year or about 2 or 3 months, even though the market is currently red but the chance of Bull Run is always easy if there is a positive sentiment and the big issue that occurs is the beginning of 2024 there will be a Halving Day which will make a request on Market increases significantly.

[d5000]

Small update: The very low implied volatility phase is still ongoing. The BitVol index stays firmly below 50. The long term chart of the indicator shows how unusual this is (at least since 2019):


Source: BitVol

Even if BTC failed to cross the 32k resistance level sustainably (until now) and it even looked a bit bearish during some time, with some below-25k dips, it seems that the assumption I made in the OP could be still intact: that after this low-volatility phase a bull run could be starting.

It seems however the low volatility phase is unusually long this time, and the recent little swings up to 30k and down to 26k haven't really changed that. A look at the "realized" volatility long term chart confirms that even if we compare the current period with data from pre-2019, never such a long low-vol period has been recorded:


Source: BuyBitcoinOnline

Seems simply we have to wait a little bit more if the assumption will become true.

[d5000]

And perhaps the final update to this thread:

The low implied volatility phase seems to have ended. Since a couple of days, the BitVol has broken the value of 50 again to the upside, reaching even 60 in one occasion:



Source: T3Index BitVol

As the "realized" volatility looks not too different than in the last weeks (we still see no really wild price swings, only we climb from one level to the next ...) it seems that the increase is primarily caused by options prices finally recovering.

Meanwhile the price also broke the 32k resistance, rallying up to the 34-35k area in only a few hours and staying there quite stable.

So I would say that the assumption I made in the OP looks to have materialized, even if it took a long, long time to do so (but as in other occasions before, the low-vol phase as a whole preceded a price increase). It's however too early to confirm this is really a "bull run" like those we had seen in the past. But it doesn't look bad, at least for now