Bitcoin The price is holding precariously in the critical support zone amid increasing volatility indices across all asset classes.
The leading cryptocurrency by market value has fallen almost 2.5% to $108,000 in 24 hours. It has entered the key support zone of $107,000 to $110,000, which, if breached, would mark a significant weakening of buying pressure and expose prices to deeper losses.
BTC’s 30-day annualized expected or implied volatility, as measured by Volmex’s BVIV index, has risen above 50%, retaining the gains seen during last Friday’s leverage dump.
The index is up more than 21% since bitcoin began retreating from the Oct. 6 all-time high of over $124,000. This rise highlights the growing Wall Street-like dynamics in the cryptocurrency market, where volatility tends to increase during price sell-offs.
The BTC volatility rally is marked by short-term and near-dated put options trading at a 5% to 9% volatility premium over call options, reflecting heightened fears of a prolonged sell-off, according to data from Deribit. Put options offer insurance against possible weakness in the underlying asset. Traders typically purchase put options to hedge their holdings in the spot market or to benefit from early market settlement.
Speaking of Wall Street, its own fear gauge, the VIX index, rose 22% to 25.43 on Thursday, the highest level since May 7. The index has risen 56% since last Friday.
Similarly, the CBOE Gold Volatility Index (GVZ) jumped 20% to 32.78 on Thursday, hitting the highest level since October 2022. The price per ounce of the yellow metal rose to a new all-time high of $4,380 per ounce.
The simultaneous rise in volatility indices in stocks, gold and cryptocurrencies underscores a widespread sentiment of risk aversion likely driven by signs of liquidity stress in the US financial system.
