Bitcoin the price is oscillating precariously within the critical support zone amid increasing volatility indices across all asset classes.
The leading cryptocurrency by market value fell almost 2.5% to $108,000 in 24 hours. It entered the key support zone at $107,000 to $110,000, which if breached would mark a significant weakening in buying pressure and expose prices to greater losses.
BTC’s 30-day annualized implied or expected volatility, as measured by Volmex’s BVIV Index, has climbed above 50%, retaining the gains seen during last Friday’s leverage reduction.
The index is up more than 21% since Bitcoin began its pullback from the Oct. 6 record high of more than $124,000. This rise highlights the growing momentum in the crypto market, similar to that of Wall Street, where volatility tends to increase during sell-offs.
The rise in BTC volatility is marked by shorts and shorts trading at a 5-9% volatility premium over calls, reflecting heightened fears of an extended sell-off, according to Deribit data. Put options provide insurance against potential weakness in the underlying asset. Traders typically purchase put options to hedge their holdings in the spot market or to take advantage of an early market sell-off.
Speaking of Wall Street, its own fear gauge, the VIX index, rose 22% to 25.43 on Thursday, its highest level since May 7. The index is up 56% since last Friday.
Likewise, the CBOE Gold Volatility Index (GVZ) jumped 20% to 32.78 on Thursday, reaching its highest level since October 2022. The price of an ounce of the yellow metal hit a new all-time high of $4,380 per ounce.
The simultaneous rise in volatility indices for stocks, gold and cryptocurrencies underlines widespread risk aversion, likely driven by signs of liquidity strains in the US financial system.
