According to BlockBeats news on October 15, the BitVol—Bitcoin Volatility Index reported a decrease by 0.74%, bringing its values down to 38.83. This index, developed by financial index provider T3 Index in conjunction with cryptocurrency options trading platform LedgerX, represents the crucial financial metrics for investors in the crypto markets.
It should be noted that BitVol measures the expected implied volatility over a 30-day interval, this volatility being derived from tradable Bitcoin options prices. Implied volatility is deduced from the actual option price using the Black-Scholes (BS) option pricing formula—keeping everything constant apart from the volatility, σ.
The final pricing of the options is a product of competition among various options traders. Hence, the implied volatility reflects the market participants' predictions and anticipation for the future performance of the Bitcoin market, and is thus viewed as the closest representation of actual volatility for the respective period.
