Bitcoin Volatility Soars to 20-month High
A key Bitcoin volatility indicator has reached its highest level in 20 months after Bitcoin dropped below $50,000, with futures traders now anticipating further potential declines in Bitcoin’s price.
Pseudonymous crypto trader Yoddha has suggested it might be “the best buying opportunity of 2024.”
The Bitcoin Volmex Implied Volatility Index hit 97.14 on Aug. 5, the same day Bitcoin briefly dipped to $49,813, according to CoinMarketCap data.
This is the highest level since November 2022, when cryptocurrency exchange FTX collapsed.
Bitcoin has since recovered to trade at $56,676 at the time of publication, but futures traders still speculate there may be further declines ahead.
“Traders are aggressively buying puts and put spreads on both BTC and ETH to protect their positions from further downside,” Tyr Capital chief investment officer Ed Hindi told Cointelegraph.
The put-to-call volume ratio, which measures the demand for put (sell) versus call (buy) options, currently stands at 46.94% calls and 53.06% puts over the past 24 hours, resulting in a ratio of 1.13, according to CoinGlass data.
“Put skew is extremely well bid. This may be a sign that the market is overextended,” Hindi added.
Hindi believes there may be further downside but doubts it will “breach” $45,000.
“Whether we trade down there will depend on how far away we are from the end of the JPY carry trade unwind. We believe we are getting close to the end,” he claimed.
However, Bitcoin options volume dropped by 39.73% over 24 hours on Aug. 6, indicating that future traders are uncertain about Bitcoin’s price direction.
Not all traders are expecting an extended downturn. Some anticipate sideways price action or even a near-term recovery.
“Aggressive sell-off would assume price to stall for a bit and give us a range,” pseudonymous crypto trader RektProof wrote in an Aug. 6 X post.
“Expect a HUGE reversal soon,” Bitgrow Lab founder Vivek Sen added.
Sources:
https://x.com/CryptoYoddha/status/1820885622460121148
https://www.tradingview.com/symbols/BVIV/
https://coinmarketcap.com/currencies/bitcoin/
https://www.coinglass.com/options
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