Analysis: Bitcoin’s “volatility storm” may be coming, and the market may face another round of turbulence

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PANews July 21 reported that, according to CoinDesk, market analysts are reminding traders to closely watch Bitcoin’s potential “volatility storm” in the near term—i.e., a market where volatility rapidly spikes. These events are often accompanied by price declines. The warning is mainly based on the trend of Bitcoin’s 30-day implied volatility index (BVIV). BVIV is often regarded as the crypto market’s “fear index” (VIX), and its movements are influenced by options demand. As a derivative investors use to hedge the risk of severe market volatility, higher demand for options usually corresponds to higher implied volatility, and vice versa. Currently, BVIV is hovering in the 34%-38% range. Historical data shows that this zone has repeatedly been a key spot before volatility outbreaks, after which Bitcoin prices often pull back. While historical patterns do not guarantee the future will repeat, the market generally believes volatility has a mean-reversion characteristic. Typically, after low-volatility periods, volatility amplification is likely to follow, while during high-volatility periods, volatility may gradually return to stability.
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