Bitcoin’s annualized 30-day implied volatility index, BVIV, the so-called fear gauge, continues to hover below 40%, well below highs above 60% seen in the early June and early February price sell-offs.
The index is influenced by demand for options or hedging instruments.
So the low reading indicates limited demand for protective options and suggests traders see little reason to prepare for sharp price swings in the near term.
This stability is at odds with the uncertainty surrounding Wednesday’s Fed rate decision. While most observers expect the bank to keep interest rates unchanged, some, including hedge fund giant Citadel, expect borrowing costs to rise.
CME’s FedWatch tool now assigns about a 35% probability of a rate hike at the upcoming FOMC meeting, an unusually high level of uncertainty for this late in the decision cycle. Fed moves are usually almost fully priced for a single outcome – hold, hike or cut – at this stage.
