The cautious stance against the latest sales wave in the Bitcoin market has become evident. The BVIV index, which is watched as the fear indicator of cryptocurrency, recorded a remarkable jump with the sharp price drop on Tuesday.
Fear indicator increased due to selling pressure
BVIV, which measures 30-day expected volatility, rose nearly 20% to 46.45% on Tuesday. This was the strongest daily increase since February 5, according to TradingView data. On the same day, Bitcoin’s spot price fell more than 6% to $66,000.
The market atmosphere was calmer in the previous two-month period. Although BTC fell from its peak of $ 82,000 in early May to $ 75,000 last week, BVIV had a limited reaction to this movement and remained around 40%, close to its intra-year lows. This picture indicated that sales were occurring regularly and that there was no widespread panic in the market.
Tuesday’s nearly 20% rally showed that option buying to hedge against the decline is gaining momentum again.
However, the picture changed on Tuesday’s retreat. The rapid rise in BVIV suggested that investors were seeking greater protection against possible additional declines. It is accepted that when the index rises, the market begins to price downside risks more seriously.
Mini dictionary: BVIV is an indicator that tracks the 30-day implied volatility expectation for Bitcoin. Implied volatility is derived from option prices and reflects investors’ expectation of future price volatility.
| Indicator | previous period | on tuesday |
|---|---|---|
| Bitcoin price | decreased from $82,000 to $75,000 | fell to $66,000 |
| BVIV | remained around 40% | increased to 46.45% |
It remained below the jump in February
Despite this, the latest movement fell behind the sharp fluctuation seen in February. On February 5, BVIV rose more than 50% in one day, and the index rose over 90% as Bitcoin pulled hard towards $60,000. Although the last increase is far from these levels, it is important in terms of the direction change in the market.
According to the evaluation conveyed in the news, the point that investors focus on at this stage is the return of the fear indicator to the upward direction rather than the size of the increase. This may indicate that the calm outlook of the last two months is beginning to weaken.
After the unusual calm of the last two months, uneasiness in the Bitcoin market has begun to gain strength again.
The negative relationship with corporate interest has strengthened
BVIV is likened to the VIX index on Wall Street in terms of its function. While VIX is considered a fear indicator for the S&P 500, BVIV serves a similar role in Bitcoin. The news stated that institutional investors entered the market more strongly after spot Bitcoin ETFs started trading in the USA.
It is stated that with the effect of this change, the inverse relationship between BVIV and Bitcoin spot price has become more stable. When the price falls, the fear indicator rises, and when the price recovers, the index declines. This dynamic, which has been seen for a long time in traditional markets, stands out as a trend that has only recently become evident in the crypto market.
In the next period, it will become clear from the price movements in the market whether Tuesday’s rise will remain a one-day reaction or whether it signals the beginning of a more permanent period of volatility.
