While optimism about bitcoin has grown since Federal Reserve Chairman Jerome Powell’s Jackson Hole speech last Friday, analysts say derivatives data shows the market is still hesitant.
“While the Bitcoin price rally following Fed Chair Jerome Powell’s speech was decisive, (implied volatility) is indicating hesitation in the market as front-end volatility is lower,” the QCP Capital analysts added, adding that Bitcoin is likely to continue trading within a narrow range of $62,000 to $67,000 in the short term.
Federal Reserve’s Dovish Attitude at Jackson Hole Symposium
Since Federal Reserve Chairman Jerome Powell’s dovish stance at the Jackson Hole Symposium last Friday, QCP Capital analysts have observed aggressive call spread buying, particularly on longer-dated options expiry dates.
Following Powell’s speech saying “it’s time to adjust monetary policy,” derivatives data suggests investors are bracing for a potential price rally, which is increasing optimism about Bitcoin’s future performance in a potentially favorable currency environment. However, QCP Capital analysts highlighted data suggesting that derivatives traders are not expecting a potential Bitcoin price rally in the short term.
“We saw a call price surge close to $100,000 by March 2025, which could indicate that the market is bullish but don’t expect an explosive move to happen so quickly,” they said.
A QCP Capital report on Monday added that Bitcoin’s implied volatility is more skewed toward puts than calls through October expiration. If implied volatility is more skewed toward puts in the coming months, it suggests the market is hedging against a potential price decline in the near term.
“Given the overwhelmingly bullish sentiment, this is surprising and suggests the market was well prepared for this move and was quick to sell calls to realize profits,” QCP Capital analysts said.
Bitcoin Bitcoin
-0.55%
It has fallen by about 1.5% over the last 24 hours and is currently trading at around $63,239. The pricing page of the block.
Disclaimer: The Block is an independent media outlet providing news, research and data. As of November 2023, Foresight Ventures is the largest investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information on the cryptocurrency industry. Below are the current financial disclosures.
© 2024 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.