Bitcoin Implied Volatility Amid Market trends and Investor Sentiments
After a strong start to 2023, Bitcoin implied volatility has fluctuated between $56,000 and $63,000 over the past three months, following a 45% surge in first half of the year, triggered by an enthusiastic launch of US exchange –traded funds (ETFs).
Yet, experts still believ that uncertainty surrounding market conditions and geopolitical tensions have contributed to this recent Bitcoin volatility.
Bitcoin and Price Volatility
Traders are focused on factors such as the upcoming US presidential elections, especially as the market is on the lookout for potential shifts in the final stages of 2024 and early 2025.
Jake Ostrovskis, a trader at UK-based crypto firm ‘Wintermute’, noted that the expected introduction of options on ‘BlackRock’s spot Bitcoin ETF’ will be a key event in potentially attracting large USretail investment after the all-Bitcoin ETFs recently secured approval from the Securities and Exchange Commission (SEC).
The volatility of Bitcoin compared to the US dollar volatility will be a key factor for investors and their trading strategies. Given that Bitcoin is deemed a commodity, these options may also need the greenlight from the Commodity Futures Trading Commission (CFTC) – regulator of commodity derivatives.
“If successful, the ETF options could increase Bitcoin’s implied volatility, spurring greater institutional and retail engagement,” added Youwei Yang, chief economist at BIT Mining.
The cryptocurrency market witnessed phenomenal growth this year alone, expanding from $8.3 billion at the beginning of 2023 to $2.2 trillion, according to CoinGecko.
Ostrovskis said that this growth has been fueled by substantial institutional onboarding and record trading activities according to him were driven by strong demand for platforms offering digital asset services affiliated to traditional financial structures.
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