over 2 years ago • 1 min
Bitcoin’s implied volatility – a measure of expected swings derived from the prices investors are paying for options – spiked higher over the weekend as crypto investors reeled from several days of hectic trading.
According to T3 Index’s BitVol index, the cryptocurrency’s implied volatility (shown in blue on the chart above) climbed to 160 on Sunday, closing in on the high of 190 set in March 2020 as pandemic panic set in. Meanwhile, a comparable measure for US stock market volatility, known as the VIX (in pink), is so far ignoring the excitement in crypto land and trading at just 19.
The trend is a marked contrast to last year, when volatility surged simultaneously in almost all markets in response to coronavirus’s global spread. So far, any excitement is remaining confined to crypto markets – while stocks and bonds shrug. The chart below shows Bank of America's MOVE Index of implied volatility in US government bonds, which has also remained subdued recently.
As much as crypto has become more established in traditional financial circles in recent years, the $1.6 trillion combined value of all crypto tokens is still tiny compared to the $95 trillion valuation of global stock markets or the $120 trillion valuation of global bonds. And this week’s indifferent reaction from stock and bond investors to crypto’s gyrations underlines that divide.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.