{"id":285882,"date":"2023-01-06T18:43:55","date_gmt":"2023-01-06T18:43:55","guid":{"rendered":"https:\/\/cryptoslate.com\/?p=285882"},"modified":"2023-01-06T18:48:19","modified_gmt":"2023-01-06T18:48:19","slug":"research-implied-volatility-shows-only-sideways-movements-for-bitcoin","status":"publish","type":"post","link":"https:\/\/cryptoslate.com\/research-implied-volatility-shows-only-sideways-movements-for-bitcoin\/","title":{"rendered":"Research: Implied volatility shows only sideways movements for Bitcoin"},"content":{"rendered":"<p class=\"p1\">The crypto derivatives market has grown so big in the past few years that it can be used as an indicator of future price movements. <a href=\"https:\/\/cryptoslate.com\/coins\/bitcoin\/\">Bitcoin<\/a> options have captured the crypto industry and have quickly turned into mature products whose movements have the power to sway the rest of the market.<\/p>\n<p class=\"p1\">Just like in the traditional financial market, Bitcoin options grant their holders the right, but not the obligation, to buy BTC at a preset price at the contract's expiration date. Options are usually priced using a metric called implied volatility (IV), which shows the market's view of the likelihood of changes in a given security's price.<\/p>\n<p class=\"p1\">Implied volatility (IV) is often used by investors to estimate future volatility in a security's price. However, while IV can predict price swings, it can't predict the direction in which the price will go. High implied volatility means there's a high chance of a large price swing, while low IV means that the price of the underlying asset most likely won't change.<\/p>\n<p class=\"p1\">As such, IV is considered a good proxy of market risk.<\/p>\n<p class=\"p1\">Looking at the implied volatility for Bitcoin shows that the market sees little risk in BTC.<\/p>\n<p class=\"p1\">Bitcoin's implied volatility currently stands at a two-year low. The sharp drop in IV has historically followed aggressive spikes caused by black swan events \u2014 spikes were seen during the 2021 Defi Summer, the Terra collapse in June 2022, and the <a href=\"https:\/\/cryptoslate.com\/bitcoin-options-traders-swing-bearish-as-ftx-fallout-takes-hold\/\">FTX downfall<\/a> in November 2022.<\/p>\n<p class=\"p1\">However, the drop in implied volatility seen at the end of 2022 shows that the derivatives market sees no major price movements in the near future.<\/p>\n<figure id=\"attachment_285902\" aria-describedby=\"caption-attachment-285902\" style=\"width: 1250px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-285902 size-full\" src=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/options-vol.png\" alt=\"bitcoin options \" width=\"1250\" height=\"660\" srcset=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/options-vol.png 1250w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/options-vol-300x158.png 300w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/options-vol-1024x541.png 1024w, https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/options-vol-768x406.png 768w\" sizes=\"(max-width: 1250px) 100vw, 1250px\" \/><figcaption id=\"caption-attachment-285902\" class=\"wp-caption-text\">Graph showing the options 25 delta skew against implied volatility (IV) (Source: CryptoSlate)<\/figcaption><\/figure>\n<p class=\"p1\">Comparing Bitcoin's implied volatility with the options 25 delta skew further confirms this.<\/p>\n<p class=\"p1\">When applied to options contracts, skew measures the implied volatility between different strike prices with the same expiration. Put simply, it presents the ratio between put and call options. Delta is a measure of change in an option's price resulting from a change in the underlying security.<\/p>\n<p class=\"p1\">The 25 delta skew looks at puts with a delta of -25% and calls with a delta of 25%, netted off to arrive at a data point. A 25-delta put skew of -25% means that the put option costs 25% less than the spot price of the underlying asset, and vice versa.<\/p>\n<p class=\"p1\">The metric essentially measures how sensitive an option's price is to changes in Bitcoin's spot price. Data analyzed by CryptoSlate shows that the premium for put options has come down from extreme levels recorded in November and June. Spikes in the 25 delta skew are usually a solid gauge for bear markets as they correlate with extreme bouts of price volatility.<\/p>\n<p class=\"p1\">December brought on a sharp drop in the 25-delta skew, which saw a slight increase in the first few days of 2023. Just like the drop in implied volatility, this indicates a much calmer market in the days and weeks to come.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The crypto derivatives market has grown so big in the past few years that it can be used as an indicator of future price movements. Bitcoin options have captured the crypto industry and have quickly turned into mature products whose movements have the power to sway the rest of the market. Just like in the [&hellip;]<\/p>\n","protected":false},"author":759,"featured_media":286731,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[77968,77921],"tags":[78284,78287,78289,78288,78285,78286],"prediction_market_topic":[],"post_folder":[],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v21.9 (Yoast SEO v21.9.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Research: Implied volatility shows only sideways movements for Bitcoin<\/title>\n<meta name=\"description\" content=\"Bitcoin&#039;s implied volatility currently stands at a two-year low and shows that the derivatives market only sees sideways movements for BTC.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cryptoslate.com\/research-implied-volatility-shows-only-sideways-movements-for-bitcoin\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Research: Implied volatility shows only sideways movements for Bitcoin\" \/>\n<meta property=\"og:description\" content=\"Bitcoin&#039;s implied volatility currently stands at a two-year low and shows that the derivatives market only sees sideways movements for BTC.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cryptoslate.com\/research-implied-volatility-shows-only-sideways-movements-for-bitcoin\/\" \/>\n<meta property=\"og:site_name\" content=\"CryptoSlate\" \/>\n<meta property=\"article:published_time\" content=\"2023-01-06T18:43:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-01-06T18:48:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2023\/01\/bitcoin-volatility.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"630\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Andjela Radmilac\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@andjelaradmilac\" \/>\n<meta name=\"twitter:site\" content=\"@cryptoslate\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Andjela Radmilac\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"NewsArticle\",\"@id\":\"https:\/\/cryptoslate.com\/research-implied-volatility-shows-only-sideways-movements-for-bitcoin\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/cryptoslate.com\/research-implied-volatility-shows-only-sideways-movements-for-bitcoin\/\"},\"author\":[{\"@type\":\"Person\",\"@id\":\"https:\/\/cryptoslate.com\/author\/andjela-radmilac\/#person\",\"name\":\"Andjela Radmilac\",\"url\":\"https:\/\/cryptoslate.com\/author\/andjela-radmilac\/\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/cryptoslate.com\/author\/andjela-radmilac\/\"},\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/cryptoslate.com\/author\/andjela-radmilac\/#authorimage\",\"url\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2025\/12\/profile-photo-andjela-radmilac-300x300.jpg\",\"contentUrl\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2025\/12\/profile-photo-andjela-radmilac-300x300.jpg\",\"caption\":\"Andjela Radmilac\"},\"jobTitle\":\"Senior Analyst\",\"description\":\"Andjela brings a classical education and politics background to crypto, where she has covered industry news since 2018.\",\"worksFor\":{\"@id\":\"https:\/\/cryptoslate.com\/#organization\"},\"sameAs\":[\"https:\/\/x.com\/andjelaradmilac\",\"https:\/\/www.linkedin.com\/in\/andjelaradmilac\",\"https:\/\/muckrack.com\/andjela-radmilac\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/#person\",\"name\":\"James Van Straten\",\"url\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/\"},\"image\":{\"@type\":\"ImageObject\",\"@id\":\"https:\/\/cryptoslate.com\/author\/james-van-straten\/#authorimage\",\"url\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/07\/cryptoslate-james-van-straten-300x300.jpg\",\"contentUrl\":\"https:\/\/cryptoslate.com\/wp-content\/uploads\/2022\/07\/cryptoslate-james-van-straten-300x300.jpg\",\"caption\":\"James Van Straten\"},\"jobTitle\":\"Former Lead Analyst\",\"description\":\"James fervently appreciates data, technology, and trend-spotting. 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