Bitcoin’s implied volatility is showing signs of life after months of subdued market action, with key indicators pointing to the potential for more dramatic price swings ahead.

The Deribit Volatility Index (DVOL) — a crypto market analogue to the stock market’s VIX — rose from 33 to 37 on Monday, snapping a long downtrend and reaching its highest level in several weeks. The shift follows a period of historically low volatility for Bitcoin, where implied volatility (IV) dipped as low as 26% just last week — among the lowest levels since options tracking began.

Implied volatility reflects the market’s expectations for future price movement, derived from options pricing. It typically rises when traders anticipate larger swings and falls during periods of calm. The at-the-money (ATM) IV is often used as a baseline sentiment gauge.

This recent uptick in IV follows a weekend rally in BTC’s spot price, which saw Bitcoin climb from $116,000 to $122,000. That move, driven primarily by spot buying rather than leverage, hints at a structurally healthier rally and could mark the beginning of broader price discovery.

“Historically, low volatility in Bitcoin has often preceded major directional moves,” said one market analyst. “This IV expansion could be the early warning signal.”

Although August is typically a quiet month for crypto markets, the rise in volatility suggests traders are preparing for more active price action. Data from Checkonchain shows that open interest has been declining throughout the month, indicating that if leverage does re-enter the market, it could fuel sharp and rapid moves.

With Bitcoin hovering just below all-time highs, the stage may be set for either a breakout or a sharp correction — and the options market is starting to price in both possibilities.