The BitVol (Bitcoin Volatility) Index launched by the financial index company T3 Index and the Bitcoin options trading platform LedgerX fell to 49.67 on January 1, 2023, a new low since April 2019. On January 2, the BitVol (Bitcoin Volatility) index rose slightly to 50.14.
The BitVol Index measures the expected 30-day implied volatility derived from the price of tradable bitcoin options. Implied volatility is the volatility implied by the actual option price. It is the volatility derived by using the B-S option pricing formula, substituting the actual price of the option and other parameters except the volatility σ into the formula.
The actual price of options is formed by the competition of many option traders. Therefore, the implied volatility represents the market participants’ views and expectations on the future of the market, and is therefore considered to be the closest to the real volatility at that time.