The cryptocurrency market was dramatically shaken today after fake news was circulated that a Bitcoin Spot ETF had been approved by the US Securities and Exchange Commission (SEC).
The false news caused a temporary increase in the price of Bitcoin, causing it to rise above $30,000. However, this excitement was short-lived as BTC fell back to its previous level after the news was denied.
According to analysis by Greeks.live, this event had a significant impact on Bitcoin's technical data. Bitcoin's volatility was evident as it fluctuated up to 10% in a single day before returning to its pre-news price.
This increased volatility affected the Implied Volatility (IV) of the options. IV is a metric used by traders to predict future fluctuations in the price of an asset. Following the fake news, major expiry option IVs for Bitcoin increased over the three-month period. Short- and medium-term IVs rose 5% overall, while ultra-short-term IVs rose nearly 20%. However, long-term option IVs expiring at year-end and beyond remain largely unchanged.
Generally, an increase in IV indicates that the market expects the price of the asset in question to move significantly.
Interestingly, Ethereum (ETH) seems unaffected by this market turmoil. IVs across all major futures of ETH remained stable, indicating that the market movement was entirely due to Bitcoin ETF fake news.
A closer look at the distribution of options trades shows that all the upside for Bitcoin came from short-term buying in the 28,000 to 30,000 range, according to the analyst. Unfortunately, options investors for this range were negatively impacted by fake news.
*This is not investment advice.