A measure of bitcoin’s implied volatility, or how much it is expected to fluctuate in the near future, rose to its highest value in close to a year on the last day of February.
The Deribit Implied Volatility Index, also known as DVOL, reached 73.6 yesterday, according to market data provided by Blockforce Capital.
At this point, the aforementioned index, a measure of bitcoin’s expected annualized volatility over the next 30 days, was at its greatest value since March 20, 2023, additional Blockforce Capital figures reveal.
The chart below shows how DVOL fluctuated over roughly the last year:
DVOL’s movements over roughly the last year
Deribit data retrieved through TradingView
To get a better sense of what a DVOL reading of 73.6 means, divide the figure by the square root of 365, which is roughly 19.1, to obtain an estimate of bitcoin’s expected daily move during the 30 days, according to an explanatory article on Deribit Insights.
In other words, a DVOL reading of 73.6 means that bitcoin is expected a fluctuate an average of 3.85% per day over this time frame.
However, traders should remember that this is only a projected result, as the aforementioned index is basically a measure of what market participants trading bitcoin derivatives on exchange Deribit think bitcoin prices will do in the next 30 days.
DVOL reached this measure at the end of a highly volatile month, where bitcoin prices approached $64,000 and came within 10% of reaching the all-time high they set in late 2021, CoinMarketCap figures show.
This result caused many market observers to declare that a fresh, all-time high is in sight, and they predicted that bitcoin may very well reach a new pinnacle this year.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and SOL.
