Realized vs implied volatility: AXiV and DVOL

"Bitcoin volatility is 45%." "Bitcoin volatility is 1.3%." Both can be true on the same day, because they answer different questions — and use different units.

Realized volatility: what already happened

Realized, or historical, volatility is measured from past prices. Take the price at equal intervals, compute the returns, take their standard deviation and scale the result to a period. It is a fact about the recent past: this is how much the price moved.

AXiV is realized volatility over the last 24 hours, computed from five-minute prices and expressed per day. BitMEX's .BVOL24H was the same kind of number.

Implied volatility: what the market expects

Implied volatility is backed out of option prices. Options get more expensive when traders expect bigger moves, so from the price of an option you can solve for the volatility the market is assuming. It looks forward: this is how much the market is paying to protect itself against moves.

Deribit's DVOL is the best-known example in crypto: the implied volatility of bitcoin or ether over the next 30 days, quoted annualised.

Comparing the units

Annualised and daily figures differ by the square root of the number of days in a year:

daily ≈ annual ÷ √365 ≈ annual ÷ 19.1

So a DVOL of 50 corresponds to roughly 2.6% a day, and an AXiV reading of 1.3% a day to about 25% a year. Compare the two only after converting them to the same unit.

When they diverge

• Implied above realized — the market is paying for protection it has not needed yet. Typical before scheduled events: rate decisions, ETF deadlines, large token unlocks.
• Realized above implied — the move has already come faster than the options priced in; often during a crash or a squeeze.
• Both low — a quiet market. Quiet periods do not last forever, but volatility does not tell you which way the next move will go.

Which one to use

Realized volatility is the honest measure of the room a coin has actually been using — useful for stops, position size and comparing coins with each other. Implied volatility adds the market's expectations, but it exists only where there is a liquid options market, which in crypto means mostly bitcoin and ether. For the rest of the coins, realized volatility is what you have, and AXiV measures every coin in the pool with the same yardstick.

See also: Bitcoin volatility index after BVOL24H.

For analysis, not for trading. Nothing here is financial advice.