- Bitcoin’s implied volatility surged last weekend.
- Bearish sentiments are flooding the market as the halving approaches.
The implied volatility for Bitcoin [BTC] options contracts expiring in April rose significantly this weekend from 62% to 75%, Kaiko noted in a recent post X (formerly Twitter).
Implied volatility measures the expected future fluctuations in the price of a currency.
Such a sharp increase in an asset’s implied volatility over a short period of time indicates a notable shift in market sentiment regarding the asset’s price in the short term.
The rise in BTC implied volatility suggests that market participants expect greater price swings or “turbulence” in the near term.
BTC on the spot market
A review of the key volatility indicators on BTC’s daily chart confirmed that the coin remains at risk of significant price swings in either direction.
For example, the gap between the upper and lower bands of the coin’s Bollinger Bands (BB) indicator has widened. This indicator assesses market volatility and potential price movements of an asset.
When the gap between the upper and lower ranges widens, the asset’s price becomes more volatile and can break out into an up or down trend.
BTC’s Bollinger Band confirms rising volatility and was in an uptrend at the time of writing. At 0.15, the value of the indicator has increased by 67% over the past four days.
This indicator measures the width of the Bollinger Bands relative to each other. When it rises (as in the case of BTC), it confirms an increase in market volatility.
Source: BTC/USDT on TradingView
Amid rising volatility and the upcoming halving on April 20, bearish sentiments in the BTC market remained significant.
Readings of the coin’s Moving Average Convergence Divergence (MACD) indicator showed that the MACD line rested below the signal and the zero lines.
These lines have been positioned this way since March 15, when the coin fell from its all-time high of $73,750.
This indicated that BTC’s short-term moving average is below its longer-term moving average. This is often interpreted as a bearish signal.
Moreover, the positive directional index (green) was below the negative index (red). This showed that the bear power of the coin was significantly greater than the bull power.
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At the time of writing, BTC’s Relative Strength Index (RSI) and Money Flow Index (MFI) stood at 43.29 and 35.45 respectively, indicating a decline in daily demand.
Source: BTC/USDT on TradingView
These values showed that market participants preferred to sell their coins rather than collect more.