The cryptocurrency market was the first to react to the macroeconomic shock that devastated global markets over the weekend. One analyst predicts more volatility is on the horizon.
“I expect implied volatility to continue at a high level in cryptocurrency markets until the macro side calms down,” said Bohan Jiang, Abra’s Head of OTC Options Trading.
Jiang noted that most options market participants were caught off guard by the recent macroeconomic downturn:
“There has been no demand for downside protection in the options market in recent weeks, and traders have mostly focused on bullish catalysts. “The market has positioned itself in upside buying as bullish sentiment is priced in, with Bitcoin implied volatility rising into the high 60s ahead of Trump's Bitcoin Nashville speech and ETH implied volatility rising into the low 70s ahead of the launch of spot Ethereum ETFs.”
Jiang described a derivatives market caught off guard by the recent macroeconomic downturn that caused the Chicago Board Options Exchange's CBOE Volatility Index (VIX) to rise. Over the past 24 hours, the VIX has risen above 65 points, the highest level since the market panic at the beginning of the COVID-19 pandemic.
*This is not investment advice.