How Do Major Market Events (E.g. Halving) Typically Affect Implied Volatility in Crypto Options?

Major market events like a Bitcoin halving typically cause a significant increase in implied volatility (IV) for options expiring near the event date. This is because the event introduces high uncertainty about the future price direction and magnitude of movement.

Traders anticipate a large move, either up or down, and bid up the price of options, thus increasing the IV. IV usually 'crushes' after the event, a phenomenon known as 'volatility crush'.