Derivatives traders in the crypto industry are currently preparing for what analysts are describing as “unprecedented” volatility in the Bitcoin market, according to Bitfinex. This heightened volatility is being driven by the anticipation of news from the Securities and Exchange Commission regarding applications for over a dozen proposed spot Bitcoin ETFs. The options market is signaling that volatility expectations among derivatives traders are at their highest, surpassing levels observed throughout 2023.
Bitfinex analysts have noted that traders are bracing themselves for the possibility of significant price movements in Bitcoin, based on signals from the options markets. This anticipation is occurring against the backdrop of record options trading volumes in December and in anticipation of potential approval of spot Bitcoin ETFs by U.S. financial regulators.
The current at-the-money implied volatility for Bitcoin has spiked to a multi-month high of 70.1%, according to The Block’s Data Dashboard. Bitfinex analysts emphasize that the surge in short-term options implied volatility indicates that traders are preparing for increased volatility as they await the SEC’s decision on Bitcoin ETFs. This implied volatility level exceeds the historical average volatility of 41.1%, as reported by Bitfinex.
As of the latest data from The Block’s Price Page, Bitcoin, the largest digital asset by market capitalization, was priced at $44,114 at 1:55 p.m. ET, representing a 4% increase in the past 24 hours.
The insights provided by Bitfinex analysts and market data offer valuable information for those operating in the crypto and NFT field, enabling them to make informed decisions in response to the anticipated volatility in the Bitcoin market.
