 ▲ Bitcoin (BTC) Plunges |
As Bitcoin’s price plunged to around the $60,000 level, the volatility index—often called a “fear gauge”—surged to its highest level since the collapse of FTX in 2022, starkly revealing market panic.
According to cryptocurrency news outlet CoinDesk on February 6 (local time), the Volmex Bitcoin Volatility Index (BVIV), a volatility indicator for Bitcoin (BTC), spiked intraday to nearly 100% on an annualized basis. This marks an almost twofold jump from around 56% just days earlier and is the highest reading since the FTX exchange collapsed at the end of 2022.
BVIV reflects expected price volatility over the next four weeks and serves a role similar to the Chicago Board Options Exchange (CBOE) VIX, known as the stock market’s volatility fear index. As Bitcoin fell sharply from $70,000 to near $60,000, demand surged in the options market to hedge against downside risk.
Put options dominated this demand. Among Deribit-listed options, the top five most-traded contracts over the past 24 hours were all put options, with strike prices concentrated between $70,000 and $20,000. In particular, $20,000 put options are viewed as insurance-style trades against the possibility of an extreme additional decline.
Cole Kennelly, CEO of Volmex Labs, said, “Over the past few days, Bitcoin’s 30-day implied volatility jumped from the low 40% range to as high as 95%,” adding, “This is the first time we’ve seen levels like this since the FTX incident, showing that fear has rapidly spread across the broader crypto market.” Jimmy Yang, co-founder of institutional liquidity provider Orbit Markets, also noted that alongside the short-term volatility surge, the market is concerned about the possibility of additional selling from digital asset treasury (DAT, cryptocurrency treasury strategy) firms.
However, as volatility has expanded excessively, expectations are also rising for a potential normalization. Bitcoin has rebounded from its lows to reclaim the $64,000 level. Market participants suggest that if prices stabilize around $60,000, the overheated volatility could also quickly retrace.
*Disclaimer: This article is for investment reference only, and no responsibility is assumed for investment losses based on this information. The content should be interpreted solely for informational purposes.*