Big moves might be coming again... Historically, there have been many instances where major price swings occurred after IV dropped below 40%. The logic behind this was explained in detail in our May 11 tweet (see quoted post). Here's a quick summary of the key points: 1. Low IV indicates a high consensus on volatility, making unexpected events more likely to be amplified. 2. Low IV attracts volatility arbitrage players, and short covering by bears can amplify the swings. 3. Market makers accumulate deeper short gamma positions, and once a breakout occurs, their hedging amplifies the volatility. Some examples from the past year: 1. In early January, 15 days after IV dropped below 40%, BTC fell from 97k to 62k. 2. At the end of April, 14 days after IV dropped below 40%, BTC fell from 82k to 60k. (This was the instance I warned about in my May 11 tweet.) 3. After June 15, BTC dropped from 66k to 58k. Of course, low IV doesn’t always lead to “downward” volatility. For example, in June 2025, 9 days after IV dropped below 40%, there was an “upward” swing where BTC rose from 101k to 119k. So, IV isn’t about predicting “direction,” but rather predicting “magnitude.” Now back to the present: 1 week: 33%, 1 month: 34%, both below 40%. This means the probability of market reflexivity and volatility triggered by trading rules is increasing. Spot traders, no big deal. Contract traders, buckle up and stay safe!