Bitcoin and Ethereum have been sideways for the past few weeks with little reaction to macroeconomic events or industry developments.
“Great Volatility in Bitcoin and Cryptocurrency Market End of Year and Beginning of 2024”
However, some analysts and investors expect a sharp increase in volatility and price towards the end of the year and beyond, driven by factors such as the potential approval of a Bitcoin spot ETF by the US Securities and Exchange Commission (SEC) and Bitcoin's halving event in 2024.
One indicator of this expectation is the steepness of the implied volatility curve, which measures the difference between short-term and long-term volatility. According to QCP Capital, a Singapore-based crypto trading firm, the implied volatility for June 2024 contracts is almost double that of August 2023 contracts, with a 24.5% margin.
According to analysts, this indicates that the market is pricing in a higher probability of major price movements in the future.
Another indicator is the persistent call skew, which means that call options that give the buyer the right to buy Bitcoin or Ethereum at a predetermined price are more expensive than put options that give the right to sell.
QCP Capital states that Bitcoin call options are almost 3% higher than put options in terms of implied volatility, indicating that there is more demand for bullish investments than bearish investments.
*Not investment advice.
