ATM IV is a key technical indicator that reflects a “measure of market participants’ future expectations for volatility as implied by options prices.” Thus, a low IV suggests that traders are not confident that the price of Bitcoin would move rapidly as we near the end of 2019. Supply-Demand and time value are the key factors in determining the Implied Volatilty’s value.
Implied Volatility is a key metric for pricing the Options contracts and is based on the supply/demand metric; the more the demand, the higher will be the IV value and vice versa. The current value of sub 60% is as low as the month of May when the Bitcoin price was hovering between the $5k – $8k mark. This was a time when people were not really bullish on Bitcoin as they were expecting the price to rise towards the end of the year.
However, if present metrics are to be considered, these traders are not very hopeful now either.
Other technical metrics also implied a further slump in the price of Bitcoin, and many have started to doubt if Bitcoin would ever touch the heights of its 2017 massive bull run which took its price near the $20k mark.
A Computer Science graduate, Prashant focuses on UK and Indian markets. With over two years of experience as a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.
You may like
Click to comment