Traders see cheaper price swings for Bitcoin as implied volatility falls to multi-month lows before Friday’s settlement.
Bitcoin’s implied volatility index, DVOL, fell to 41.5%, down from February’s 90% peak but above May’s lows. The decline signals traders expect smaller price swings for the cryptocurrency, making options contracts cheaper to buy.
Volatility typically reverts to historical averages, prompting traders to buy options when levels appear low. Calls are currently cheaper than puts, increasing the appeal of bullish call spread strategies ahead of the quarterly reset.
Friday’s $10 billion options expiry is a major liquidity event, historically driving volatility higher. Traders holding puts from recent months may adjust positions, adding to near-term price swing risks.