Bitcoin (BTC) Hits Record High Above $109,000, Sending Implied and Realized Volatility to August Highs

Realized volatility is the historical price fluctuations of bitcoin over the past 30 days. It hit 67 on the Bitcoin Volatility Index (BVOL) on Deribit. The Bitcoin Volmex Implied Volatility index (BVIV) hit a high of 71.

Bitcoin (BTC) hit a record-high above $109,000 on Monday, fueled by expectations of a strategic bitcoin reserve announcement by President-elect Donald Trump.

The record-breaking rally was accompanied by a surge in both implied volatility and realized volatility, reaching their highest levels since August's yen carry trade unwind, according to traders and market data.

Realized volatility, measured by the historical price fluctuations of bitcoin over the past 30 days, hit 67 on the Bitcoin Volatility Index (BVOL) on Deribit. Meanwhile, the Bitcoin Volmex Implied Volatility index (BVIV) reached a high of 71. Implied volatility, derived from options pricing, gauges the market's expectation for future price fluctuations. Both indexes were up about 2% on the day.

"The positive correlation between bitcoin's price and implied volatility remains intact. It’s a sign traders are chasing options, particularly calls, as risk reversals show calls are trading at a premium relative to puts that offer downside protection," said Omkar Godbole, a markets analyst and managing editor of markets at CoinDesk.

In a further indication of bullish sentiment, shorter-duration calls are priced higher than longer-duration ones, a rare occurrence in the bitcoin options market. "This is a sign of strong short-term bullish sentiment," said Andre Dragosch, European head of research at Bitwise.

Moreover, open interest in options has increased by 44,000 BTC, reflecting heightened speculative activity, Dragosch added.