Bitcoin volatility surge may signal return to options-driven prices: Analyst

Bitcoin’s (BTC) terms volatility has surged implicit the past 2 months, signaling a imaginable instrumentality to options-driven terms enactment that sparks ample marketplace moves successful some directions.

Bitcoin’s implied volatility ne'er broke past 80% aft Bitcoin ETFs were approved successful the United States, according to Jeff Park, a marketplace expert and advisor astatine concern steadfast Bitwise.

However, a illustration shared by Park shows that Bitcoin’s volatility is creeping backmost up to astir 60 astatine the clip of this writing.

Historical BTC volatility levels amusement ample spikes earlier Bitcoin exchange-traded funds were approved for US markets successful 2024. Source: Jeff Park

Park cited Bitcoin’s explosive terms enactment successful January 2021, which kicked disconnected the 2021 bull run that took BTC to caller all-time highs and a rhythm apical of $69,000 successful November of that year, arsenic the past large options-driven melt-up. He said:

“Ultimately, it is options positioning, not conscionable spot flows, that creates the decisive moves that transportation Bitcoin to caller highs. It’s imaginable that for the archetypal clip successful astir 2 years, the volatility aboveground is flickering with aboriginal signs that Bitcoin mightiness go option-driven again.” 

The investigation counters the mentation that the beingness of ETFs and organization investors has permanently smoothed retired Bitcoin’s terms volatility and shifted marketplace structure to bespeak a much mature plus class, bolstered by passive inflows from concern vehicles.

Related: ‘Volatility is your friend’: Eric Trump not bothered by Bitcoin, crypto carnage

Volatility is rising amid the marketplace carnage, triggering fears of an extended downturn

The elevated volatility successful the BTC marketplace is accordant with levels crossed each plus classes, according to Binance CEO Richard Teng.

Bitcoin implied volatility fertile and percentile compared to humanities levels. Source: Deribit

Bitcoin crashed beneath $85,000 connected Thursday, triggering fears of further downside successful the coming weeks and perchance starting the adjacent Bitcoin carnivore market.

Analysts person presented respective theories astir the causes of the downturn, including the liquidation of highly leveraged positions successful derivatives markets, BTC long-term holders cashing out, and macroeconomic pressures.

The ongoing BTC downturn is owed to short-term factors and signals “tactical rebalancing,” alternatively than organization formation oregon a deficiency of demand, according to analysts astatine crypto speech Bitfinex.

This does not derail Bitcoin’s semipermanent fundamentals, terms appreciation, oregon organization adoption trends, the analysts said.

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