Bitcoin’s volatility spiked during Thursday’s massive selloff as traders rushed for downside protection.
Deribit’s bitcoin volatility index, known as DVOL, jumped sharply, rising from around 37 to over 44. DVOL is crypto’s closest equivalent to Wall Street’s VIX, a fear gauge that tracks how much price movement traders expect over the next 30 days based on options pricing.
When DVOL rises, it means traders are paying for protection, options are becoming more expensive, and fear is rising.
Options are derivative contracts that give the buyer the right to buy or sell the underlying asset at a predetermined price at a later date. A call option gives the right to buy and represents a bullish bet on the market. A put option provides protection against price declines.
The spike in volatility came as markets digested renewed macro uncertainty, including rising risks of a government shutdown and new political noise surrounding the future leadership of the Federal Reserve. Volatility also rose in traditional markets, with the VIX rising in parallel, reinforcing the sense of a broader risk-off movement rather than a crypto-only event.
Despite the increase, bitcoin’s implied volatility remains far from extreme when viewed in historical context.
Deribit data shows bitcoin’s IV rank of 36, meaning that current implied volatility (a market-driven metric that represents the expected future volatility of an asset’s price) is only modestly above its lows from the past year. The IV Percentile is close to 50, indicating that bitcoin’s volatility has been lower than current levels about half of the time over the past 12 months.
In general terms, volatility jumped quickly, but it is not stretched yet.
This is important for traders. A rising DVOL tells options markets to expect greater price volatility ahead, even if spot prices appear to be stabilizing. IV Rank and IV Percentile help traders assess whether options are cheap or expensive relative to recent history, which can shape decisions around hedging, leverage and risk exposure.
So far, options markets are signaling caution rather than panic.
Still, paired with more than $1.7 billion in liquidations and heavy long positioning washed out across exchanges, the spike in volatility shows how fragile positioning had become. As prices fell, foreclosures did the rest.
The message from the derivatives markets is simple. Bitcoin is no longer calm. And traders are bracing for more turbulence ahead, with some targeting the $70,000 mark in the coming weeks.
