Bitcoin Volatility Expectations Fall Sharply After BTC Price Failure to Break $25K

cryptonews.com:

This time last week, Bitcoin looked like it might be on the verge of mustering a key short-term bullish breakout. The world’s largest cryptocurrency by market capitalization had formed a bullish short-term ascending triangle pattern and looked like it was about to break above the key $25,200-400 area, opening the door for a quick run higher towards the next major area of resistance around $28,000.

As things happened, a combination of macro headwinds (a month of strong US data and hawkish Fed speak that pushed US yields and the dollar higher and US stocks lower) and US regulatory concerns amid a widening crypto crackdown kept the bulls at bay. Bitcoin ended up falling about 3.0% last week and is already another just over 1.5% lower this week.

At current levels in the low $23,000s, Bitcoin is around the mid-point of February’s $21,400-$25,300ish range. And traders/investors seem to be betting that rangebound conditions will ensue for some time. At least, that’s the message that Bitcoin options markets are sending.

According to data presented by The Block, Deribit’s Bitcoin Volatility Index (DVOL) has dropped sharply over the course of the last week, seemingly as a direct result of Bitcoin’s latest failure to break above $25,000, which would have likely resulted in significant (most likely bullish) near-term volatility. The DVOL was last at 50, down from 60 this time last week. That’s not far above the record lows it printed back in January at 42, just before the 2023 crypto rally really got going.

Separately, Implied Volatility according to the pricing of At-The-Money (ATM) options has also dropped sharply, with short-term volatility expectations experiencing the sharpest move lower. According to data presented by The Block,