Bitcoin option implied volatility has plunged to rock bottom; three times so far this year, it has consistently signaled significant Bitcoin price swings.
2026.07.20 16:17:50
Crypto analyst Murphy pointed out that Bitcoin’s option implied volatility (IV) is currently extremely low, with the 1-week IV at 33% and the 1-month IV at 34%—both below the 40% historical range, signaling potential "sharp price swings" in the market. Murphy’s statistics show two similar cases in the past year: 15 days after IV fell below 40% in early January, BTC dropped from $97,000 to $62,000; 14 days after IV dipped below 40% at the end of April, BTC declined from $82,000 to $60,000; and after June 15, BTC fell from $66,000 to $58,000. Murphy noted that low IV stems from market consensus, accumulated volatility arbitrage capital, and market makers’ short gamma mechanism—factors that together amplify the impact of unforeseen events. He reminded derivatives traders to prepare accordingly.
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