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Bitcoin Volatility Surges: Is the Calm Before the Storm Over?

by Crypto Hobby

Updated August 12, 2025

Bitcoin price chart with upward-trending arrows.

Bitcoin's market has experienced a notable shift as implied volatility (IV) rises, potentially signaling the end of a prolonged period of calm.

The Deribit Volatility Index (DVOL), a key indicator for 30-day expected price swings, has climbed to its highest level in weeks, moving from 33 to 37.

This uptick suggests that traders are anticipating more significant price movements in the near future.

Key Takeaways

Bitcoin's implied volatility has increased, moving from 33 to 37.
The Deribit Volatility Index (DVOL) is at its highest level in weeks.
Short-term IV recently hit multi-year lows before this rebound.
August typically sees lower trading volumes, but rising IV indicates potential for larger moves.
The recent price rally was spot-driven, suggesting a healthier market structure.

Understanding Implied Volatility

Implied volatility (IV) is a crucial metric that reflects the market's expectation of future price fluctuations.

It is derived from the prices of options contracts.

In essence, IV quantifies the expected one-standard-deviation range of an asset's price movement over a year.

Monitoring at-the-money (ATM) IV provides a standardized view of market sentiment, often correlating with realized volatility.

Historical Context and Future Outlook

Last week, Bitcoin's short-term IV had dipped to approximately 26%, marking one of the lowest points since options data became available.

This period of low volatility occurred in August 2023, when Bitcoin was trading around $30,000, shortly before a significant upward price movement.

The recent surge in Bitcoin's price, from $116,000 to $122,000 over the weekend, serves as a potential indicator of what can occur when volatility begins to expand.

While August is traditionally characterized by lower trading volumes and subdued market activity, the current rise in IV suggests that market participants are preparing for potentially larger price swings.

On-chain data indicates that the latest rally was driven by spot market activity rather than excessive leverage, which is generally viewed as a more sustainable market structure.

Open interest has been on a downward trend throughout August, implying that a sudden increase in leverage could amplify price volatility if market sentiment shifts.