Bitcoin’s 30-day annualized implied volatility index, BVIV, the so-called fear gauge, continues to hover below 40%, well below the highs above 60% seen during the sell-offs in early June and early February.
The index is influenced by the demand for options or hedging instruments.
Thus, the low figure indicates limited demand for protective options and suggests that traders see no reason to prepare for sharp price swings in the near term.
This stability belies the uncertainty surrounding the Fed’s rate decision on Wednesday. While most observers expect the bank to keep rates unchanged, some, including hedge fund giant Citadel, expect borrowing costs to rise.
The CME’s FedWatch tool now assigns a roughly 35% probability of a rate hike at the next FOMC meeting, an unusually high level of uncertainty at this end of the policy cycle. The Fed’s decisions are normally almost entirely integrated into a single outcome – hold, hike or cut – at this point.
