Bitcoin’s Implied Volatility Remains Low, But Hints at More Upside for BTC Price

Bitcoin (BTC) price soared 7.33% on May 8, setting up a daily high of $104,175. In total, BTC has soared nearly 22% since April 21. Despite this sudden spike and millions in liquidations, BTC’s 30-day Implied Volatility (IV) remains around 48 for the ninth day.

BTC price today trades at $102,971.0 on 9 PM. In the past 24 hours, BTC is up -0.41% with a daily high of $103,890.0 on October 24.

Volmex’s 30-day Implied Volatility for Bitcoin (BVIV) hovers around 48.  Since implied volatility is annualized, Bitcoin’s daily percentage price swing would be 2.52%, obtained by dividing BVIV by the square root of 365, since BTC trades all year round. Multiplying 2.52% with the BTC’s current value shows that Bitcoin price could swing roughly $2,619 in either direction today.

Bitcoin price prediction based on 30-day IV suggests that the upper and lower limits for Bitcoin (BTC) today would be $106.5k and $101.3k, respectively.

What’s next for the BTC price? While using 30D BVIV to predict today’s average Bitcoin price range is good, we can take this a step further. Averaging the IV for multiple timeframes can help forecast short-term tops and bottoms for BTC. The logic behind this outlook is that spikes in IV are often caused by demand in short-dated options, which leads to traders getting caught on the wrong side.

The blue line shows average IV standard deviation lines on either side. A spike in BVIV above a standard deviation of +2 signals inflated IVs and hints reversal. On the contrary, a drop in IVs below the -2 standard deviation would indicate that a bullish reversal is next. Plotting these buy and sell signals on the chart shows a decent success rate of predicting cycle tops and bottoms for BTC price.

The indicator shows low IVs despite BTC’s climb to $104k. This implies that the investors are likely sidelined. It also hints that the chances of BTC’s price continuing on this uptrend are high, potentially reaching ATHs.

On the four-hour chart, this signal becomes noisy. Regardless, the BVIV has tagged the +1.5 standard deviation band, signaling overheating and a potential short-term correction or consolidation.

To conclude, the outlook for Bitcoin price remains bullish as ever, with the ATH just inches away. Investors must remain cautious and not euphoric since altcoins have yet to break out and rally as BTC did. So, there are plenty of opportunities in the crypto market.