Why Bitcoin Volatility Remains Sticky While S&P 500's VIX Reverses October 10 Surge

Group 1 - Bitcoin's volatility index remains elevated, contrasting with the easing of the S&P 500 VIX index, attributed to concerns around auto-deleveraging and poor market liquidity [1][3][4] - The market panic on October 10, triggered by President Trump's tariffs announcement on China, caused Bitcoin's price to drop from approximately $122,000 to $104,000, with its annualized 30-day implied volatility surging from 40% to 60% [2][3] - The current stabilization of Bitcoin's volatility index above 50% indicates persistent risk pricing in the crypto market, while the VIX has fallen below 20% [3][4] Group 2 - Auto-deleveraging (ADL) risks have become a significant concern, as it is triggered when exchanges' insurance funds are insufficient to cover losses, leading to the forced closure of profitable positions [6][7] - The October 10 crash highlighted previously underestimated ADL risks, which are now firmly embedded in investors' perceptions, contributing to sticky implied volatility [7] - Liquidity issues in the cryptocurrency market can lead to increased volatility; low liquidity means that even small orders can significantly impact market prices [8]