Derivatives Traders Prepare for High Volatility
Traders in the Bitcoin market are bracing themselves for potential unprecedented volatility, according to insights from Bitfinex analysts. These expectations for price swings are higher than any observed in 2023. The surge in options trading volumes in December has contributed to this anticipation. Traders are especially interested in a crucial decision from the U.S. Securities and Exchange Commission (SEC) regarding the approval of spot Bitcoin exchange-traded funds (ETFs).
Surge in Short-Term Options Implied Volatility
The Bitfinex analysts have highlighted a sharp rise in short-term options implied volatility on January 2nd, following a significant expiration event in December. This surge indicates that traders are preparing for increased volatility in the Bitcoin market. The pending decision from the SEC on Bitcoin ETFs adds to the uncertainty, with market participants closely monitoring regulatory developments.
At-the-Money Implied Volatility Reaches Multi-Month Peak
According to Glassnode data, the at-the-money implied volatility for Bitcoin reached a multi-month peak, reaching 70.1% on Tuesday. Specific data from Deribit shows that the top strike price by volume over smaller timeframes could be $60,000. However, the top strike price by open interest is $50,500, and the largest open interest by expiration date is January 26th. These details provide insights into the price levels that traders are closely watching in the options market.
Growing Interest in Crypto Options
Crypto options volumes hit an all-time high in December, indicating increasing interest in the sector. Despite the large expiration event on December 29th, overall implied volatility rose instead of falling due to news about ETFs. Implied volatility spiked to a high of 67.6%, surpassing the historical volatility of 41.1%.
Bitcoin Trading at $43,609.14
Currently, Bitcoin is trading at $43,609.14, showing a nearly 2.3% increase in the last seven days.
Hot Take: Bitcoin’s Volatility Signals and SEC ETF Decision
Traders in the Bitcoin market are preparing for unprecedented volatility as options markets indicate significant price swings. The surge in options trading volumes and the pending decision from the SEC regarding Bitcoin ETFs contribute to this anticipation. With at-the-money implied volatility reaching multi-month highs and specific strike prices attracting attention, traders are closely monitoring the options market. The growing interest in crypto options is evident from the record-high volumes observed in December. Overall, market participants are bracing themselves for potential price movements in the Bitcoin market.
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