October 4, 2024 – The Bitcoin Volatility Index (BitVol), launched by financial index company T3 Index in collaboration with LedgerX, increased to 57.18 yesterday, marking a 0.94% rise in a single day.
The BitVol Index measures the 30-day expected implied volatility derived from the prices of tradable Bitcoin options. Implied volatility reflects the market’s expectations of future volatility, calculated using the Black-Scholes (BS) option pricing formula. This formula takes into account the actual price of the option and various parameters, excluding volatility (σ), to derive a volatility estimate.
The prices of options are influenced by competitive trading among various option traders, making implied volatility a key indicator of market sentiment. It encapsulates market participants’ views and expectations for Bitcoin’s future movements, thus providing insight into the current state of volatility in the cryptocurrency market.
As the Bitcoin market continues to evolve, changes in the BitVol Index can serve as a critical tool for traders and investors looking to gauge potential price fluctuations and market dynamics.
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