How Does a Major Cryptocurrency News Event Typically Affect Implied Volatility?

A major cryptocurrency news event, such as a regulatory announcement, a protocol upgrade, or a significant market hack, typically causes a sharp, short-term increase in implied volatility (IV). This is because the market anticipates a period of heightened price uncertainty and potential large swings.

Options premiums will spike as traders rush to buy protection (puts) or speculate on a move (calls), reflecting the increased market risk.