How does option implied volatility affect the trading volume of cryptocurrencies?

1 answers

• cmmattinglyNov 09, 2024 · 8 months ago
  Option implied volatility is a key determinant of the trading volume of cryptocurrencies. When the implied volatility is high, it indicates that there is a higher level of market uncertainty and potential for significant price movements. This attracts more traders and investors who are eager to capitalize on these price swings. As a result, the trading volume tends to increase during periods of high implied volatility. Conversely, when the implied volatility is low, it suggests that the market is relatively stable, and there may be fewer trading opportunities. This can lead to a decrease in trading volume as traders are less active. Therefore, option implied volatility directly influences the trading volume of cryptocurrencies.
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