Why Bitcoin Volatility Remains Sticky While S&P 500's VIX Reverses October 10 Surge

Bitcoin's (BTC) implied volatility remains elevated, evidenced by the BVIV index staying above 50%, even as the S&P 500's VIX index has fallen back below 20% following the October 10 market shock. Experts attribute this divergence to traders pricing in new risks specific to the crypto market, notably auto-deleveraging (ADL) events, which were underestimated before the crash. ADL, which socializes losses during market stress, was triggered on several exchanges during the October 10 panic, cementing this risk in investor sentiment.

Furthermore, market liquidity has thinned following the crash, partly due to infrastructure issues at major exchanges like Binance. This reduced market depth makes prices more susceptible to large swings. Analysts suggest this might signal a shift into a higher-volatility regime rather than a temporary shock. Tightening fiat liquidity conditions in offshore markets, indicated by rising HIBOR rates, are also cited as a factor supporting elevated BTC volatility, which is heavily influenced by the offshore market.

(Source：CoinDesk)