Bitcoin volatility surged during Thursday’s sharp selloff as traders moved aggressively to hedge downside risk, though derivatives markets indicate fear has not yet reached elevated levels seen earlier this year.

Deribit’s bitcoin volatility index (DVOL) climbed rapidly, rising from about 37 to above 44. Often described as crypto’s version of the VIX, DVOL reflects the level of price movement traders expect over the next 30 days, derived from options pricing. When DVOL rises, it signals growing demand for protection and higher option premiums.

The volatility spike coincided with renewed macro uncertainty, including rising risks of a U.S. government shutdown and fresh political speculation surrounding the future leadership of the Federal Reserve. Volatility also increased in traditional markets, with the VIX moving higher in tandem, underscoring a broader risk-off shift rather than a crypto-only move.

Despite the sharp increase, bitcoin’s implied volatility remains moderate by historical standards. Deribit data shows an IV Rank of 36, indicating current implied volatility is only modestly above its lowest levels over the past year. IV Percentile sits near 50, suggesting bitcoin has traded at lower volatility roughly half the time during the last 12 months.

In short, volatility has jumped quickly, but it is not yet stretched.

That distinction matters for market participants. Elevated DVOL implies options traders are positioning for larger price swings ahead, even if spot prices stabilize. Measures such as IV Rank and IV Percentile help traders assess whether options are relatively expensive or cheap compared with recent history, influencing decisions around hedging, leverage, and risk management.

For now, derivatives markets are signaling caution rather than outright panic. Still, with more than $1.7 billion in liquidations and long-heavy positioning unwound across exchanges, the volatility spike highlights how fragile market positioning had become. Once prices broke lower, forced selling amplified the move.

The message from options markets is clear: bitcoin has exited its recent period of calm. Traders are bracing for further turbulence, with some now eyeing a move toward the $70,000 level in the weeks ahead.