According to BlockBeats, the BitVol Index, a measure of Bitcoin's expected 30-day implied volatility, increased to 64.62 on December 13, marking a daily rise of 0.91%. This index, developed by financial index company T3 Index in collaboration with options trading platform LedgerX, reflects the volatility derived from the prices of tradable Bitcoin options.
The BitVol Index is calculated using the Black-Scholes option pricing model, which incorporates the actual prices of options and other parameters, excluding volatility, to deduce the implied volatility. Implied volatility is a critical metric as it represents the market's expectations of future volatility, inferred from the competitive pricing of options by numerous traders. This makes it a valuable indicator of market sentiment and expectations regarding future price movements, providing insights into the perceived risk and uncertainty in the Bitcoin market.
