Deribit DVOL Monitor
While the Fear & Greed Index measures retail sentiment, the Deribit Volatility Index (DVOL) measures professional market expectations. It is the 'VIX' of the crypto world.
Problems it solves
Quantifying Market Fear
DVOL spikes during times of extreme uncertainty, helping you identify potential market bottoms or periods of high risk.
Options Pricing Insights
Understand whether options are currently expensive or cheap relative to historical volatility.
Hedging Decisions
Decide when to buy protection (put options) or when to sell volatility (covered calls) based on the current DVOL level.
How to use correctly
1. Access the DVOL chart on Deribit or via specialized data providers.
2. Look for the current annualized volatility percentage (e.g., 60%).
3. Compare current DVOL to the 30-day realized volatility to see if markets are over-pricing or under-pricing future moves.
4. High DVOL levels (relative to history) often suggest a market that is 'priced for chaos' and may represent a contrarian opportunity.
Limitations
- ✕DVOL measures expected volatility, not direction. A high DVOL can occur during a pump or a dump.
- ✕Volatility can remain elevated for much longer than expected.
- ✕Requires a basic understanding of options and implied volatility to interpret correctly.
Best For
Sophisticated traders and institutional investors who use volatility as a primary risk indicator for their portfolios.