Bitcoin’s “fear gauge” just surged to levels not seen since the FTX implosion, as prices plunged toward $60,000 and traders scrambled for protection. Volmex’s bitcoin volatility index (BVIV) — the crypto equivalent of the VIX that measures annualized, four-week implied volatility — jumped sharply this week, reaching roughly 95–100% from mid‑week readings in the 40s–50s. That spike marks the highest BVIV since the end of 2022, when FTX collapsed and markets panicked. What moved markets - The move was driven by a rapid fall in bitcoin’s price from about $70,000 to nearly $60,000, which sent traders piling into options, especially puts used to hedge downside risk. - Deribit-listed data show the five most‑traded contracts in the past 24 hours were all puts with strikes ranging from $70,000 down to $20,000 — the $20,000 put effectively a bet that BTC could revisit 2020 lows. - Short-dated (front-end) implied volatility led the surge as dealers adjusted gamma exposure; longer-dated vols rose less, leaving the volatility curve steeply inverted. Why it matters Implied volatility rises when demand for options increases — market participants buy calls to leverage upside and puts as insurance. “A wave of panic swept through crypto markets this week,” Volmex Labs CEO Cole Kennelly told CoinDesk, noting BVIV surged from just over 40 to roughly 95 in days. Orbit Markets co‑founder Jimmy Yang added that clients rushed to buy downside protection amid fears that balance-sheet losses at firms holding bitcoin could trigger forced selling and further downside. Current picture and outlook Bitcoin has staged a partial comeback, trading above $64,000 at the time of writing — about a 5% recovery from the overnight low. Market participants say sentiment is in “extreme fear,” but if price action stabilizes near the $60k area, stretched volatility could pull back quickly. Still, significant uncertainty remains — particularly around digital-asset treasuries (DATs) and the risk of cascade liquidations — keeping demand for protection elevated for now. Bottom line: the BVIV spike signals acute short-term panic and heavy demand for puts. A stabilized price could calm volatility fast, but the market remains fragile while balance-sheet and unwind risks linger. Read more AI-generated news on: undefined/news