Cryptocurrency exchange Bitfinex analysts have warned that the Bitcoin market could experience “unprecedented” volatility.
This warning comes as the industry eagerly awaits news from the U.S. Securities and Exchange Commission (SEC) regarding applications for multiple spot bitcoin ETFs.
Analysts said signals from the options market indicate that volatility expectations among derivatives traders are currently higher than those observed for all of 2023, The Block reported. “According to signals from the options markets, traders are preparing for the possibility of unprecedented price movements in Bitcoin,” Bitfinex analysts said.
This expectation comes after record options trading volumes in December and ahead of possible approval of spot BTC ETFs by US financial regulators. Bitfinex analysts noted this increase in the implied volatility of short-term options, saying it shows that “traders are bracing for more volatility ahead as they await a decision from the SEC regarding BTC ETFs.”
According to Bitfinex, implied volatility has reached current highs above the historical average volatility of 41.1%. This shows that traders are preparing for significant market movements in the near future.
*This is not investment advice.