Derivatives traders are expecting “unprecedented” volatility in the Bitcoin market, according to a Bitfinex analyst.
As the industry anxiously awaits word from the Securities and Exchange Commission on applications for more than a dozen spot Bitcoin ETFs, analysts say signals from the options market suggest that volatility expectations among derivatives traders are currently higher than those observed globally. He told The Block that it implied that. 2023.
“Signals from the options market suggest that traders are bracing for the possibility of unprecedented price volatility in Bitcoin,” Bitfinex analysts said.
These expectations come ahead of record options trading volume in December and the possible approval of a spot Bitcoin ETF by U.S. financial regulators.
Bitcoin implied volatility surges
Bitcoin’s current at-the-money implied volatility soared to a multi-month high of 70.1% on Tuesday, according to The Block’s data dashboard.
Bitfinex analysts noted the volatility inherent in this surge in short-term options, saying, “Traders are bracing for more volatility ahead as they anticipate the SEC’s decision on Bitcoin ETFs.” According to Bitfinex, implied volatility is currently at its highest, exceeding the historical average volatility of 41.1%.
The largest digital asset by market capitalization was trading at $44,114 at 1:55 PM ET, according to The Block’s pricing page. That’s an increase of more than 4% in the last 24 hours.
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