After yet another weekend of indecisive price action, crypto markets enjoyed a bounce across the board yesterday. Today, the market was finding its footing before Coinbase’s announced its 4% rewards card can be spent through Apple Pay and Google Pay, causing another mini pump. While the next few weeks of price action are likely to be choppy and range bound, early data suggests volatility may be culled for now.
- Implied volatility for various durations of BTC options have fallen over the past week, indicating cheaper options across the board (good for buyers, bad for sellers).
- Implied volatility, as the name suggests, is not a measure of actual volatility. It’s an output from the Black Scholes equation that measures the assumed volatility an option is being priced at. Thus, lower implied volatility means options are being priced with less volatility, which further indicates the options market believes volatility will continue to fall in the coming weeks.