Bitcoin volatility drops to 11-month low as demand wanes

Bitcoin's volatility in the options market has sharply decreased, with BTC trading in a narrow range of 62000 to 66000 dollars since early last month. The Volmex BVIV Index, indicating annualized 30-day implied volatility for BTC options, fell to 35.59% over the weekend, the lowest since September last year. This is a significant drop from February when the index exceeded 90% as BTC fell from 90000 to around 60000 dollars. Griffin Sears, head of derivatives at FalconX, attributed the lower volatility to a supply-demand imbalance in the options market, where demand for directional options has diminished while supply remains high. He noted that more investors are writing and selling options to market makers, particularly BTC miners and companies that are increasingly selling call options on their holdings to generate income. This steady supply of options selling has contributed to the decline in implied volatility. Additionally, weaker trading activity and a sluggish spot market have led to a decrease in realized volatility, which in turn affects implied volatility.

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