Bitcoins The price is hovering precariously in the critical support zone amid a rising rise in volatility indices across asset classes.
The leading cryptocurrency by market capitalization has fallen nearly 2.5% to $108,000 in 24 hours. It has entered the key support zone of $107,000 to $110,000, which, if breached, will mark a significant weakening of buying pressure and expose prices to deeper losses.
BTC’s annualized 30-day implied or expected volatility, as measured by Volmex’s BVIV index, is up over 50%, maintaining gains seen during last Friday’s leverage washout.
The index is up more than 21% since bitcoin began its retreat from the Oct. 6 record above $124,000. This increase highlights the growing Wall Street-like dynamics in the crypto market, where volatility tends to increase during price selloffs.
The uptick in BTC’s volatility is marked by short and near-dated puts trading at a 5% to 9% volatility premium to calls, reflecting heightened fears of a prolonged selloff, according to Deribit data. Put options offer insurance against potential weakness in the underlying asset. Traders usually buy puts to hedge their spot market holdings or to profit from an expected market sell-off.
Speaking of Wall Street, its very own gauge of fear, the VIX index, rose 22% to 25.43 on Thursday, its highest 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 its highest level since October 2022. The yellow metal’s price per ounce rose to a fresh lifetime high of $4,380 an ounce.
The simultaneous rise in volatility indices across stocks, gold and cryptocurrencies underscores a broad-based risk-off sentiment likely driven by signs of liquidity stress in the US financial system.
