Analysts say the implied volatility of CME’s short-term out-of-the-money Bitcoin put options has increased over the past month as traders anticipate greater price volatility and brace for the possibility of further downside moves.
“Over the past few weeks, we have seen a larger increase in IV for short-term put options compared to call options, suggesting an increased preference for tactical hedging,” CF Benchmark analysts told The Block.
An increase in the IV of a put option compared to a call option indicates that the trader is expecting greater price movement or increased uncertainty, especially on the downside. “From May 31 to June 24, the IV in 5D puts increased by 13.3%, and from June 7 to June 24, IV in 5D puts increased by 23%,” the analysts added.
However, there has been no dramatic change in strategic positioning for long-term OTM currencies, according to CF Benchmark data. “This means traders continue to look for long-term upside in Bitcoin prices, with IV seen as a short-term sentiment shift,” the analysts added.
Bitcoin BTC
-0.44%
According to The Block’s pricing page, it has changed hands for about $61,245 at the time of this writing and has been trading flat over the past 24 hours. Global cryptocurrency market cap stood at $2.39 trillion on Wednesday, down 0.1% over the past 24 hours, according to data from Coingecko.
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