Analysis: Bitcoin implied volatility is approaching its historical support range, and the risk of a “volatility breakout” is heating up

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Deep Tide TechFlow message: On July 20, according to CoinDesk, Bitcoin’s 30-day implied volatility index (BVIV) is currently hovering in the 34%–38% range. In recent years, this range has repeatedly become a precursor to volatility surges, and it has been accompanied by sharp price drops. The market should be alert to the risk of “volmageddon” (a sudden spike in volatility).

Historical patterns show:

After BVIV touched this range at the end of May this year, Bitcoin fell from $74,000 to below $60,000 in less than a week

Before the correction prior to the early-February crash and the pullback after the October all-time high, similar signals appeared

Currently, BVIV is below the 30-day and 200-day moving averages, indicating that volatility is relatively “cheap” and is sitting at a historically reliable support level. The mean-reversion characteristics suggest there will be upward pressure on volatility ahead.

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