Bitcoin and Ethereum Options Expect Markets to Be Sluggish in June with Inherent Volatility: Analyst
Analysts said the current level of implied volatility (a measure of expected future price movements) in Bitcoin and Ethereum options indicates that traders expect the markets to remain relatively stable over the next few weeks.
“Implied Volatility Rank 40th and Implied Volatility Percentile 52nd. Both indicators are mid-level indicators that the market is not expecting much activity,” Luuk Strijers told The Block.
Using the Deribit Volatility Index, which measures market expectations of Bitcoin’s future volatility over the next 30 days, the block’s data dashboard shows that Bitcoin’s implied volatility has decreased significantly since mid-May.
Option implied volatility indicates market weakness.
QCP Capital analysts observed the same indicators for the underperforming market, saying, “Despite dominant catalysts, implied volatility completely collapsed following the approval of the spot Ether exchange-traded fund (ETF).”
The U.S. Securities and Exchange Commission (SEC) approved the Spot Ether ETF on Thursday, May 23. However, unlike Bitcoin ETFs, which begin trading the day after approval, Ether ETFs may not be active for weeks or months.
However, QCP Capital analysts added: “A quiet market could be offside and our bets are on the bullish, especially for Ethereum.” They suggested that a bullish move in Ether could occur if the spot Ether ETF begins trading earlier than expected in June.
Ethereum put call rates are showing weakness.
Strijers added that derivatives indicators show traders are buying puts to hedge against a potential decline in asset prices in the coming weeks. “As of mid-June, put-call skew is negative, meaning there are expectations of weakness over the next two weeks,” he said.
Block’s data dashboard shows put-call rates for Ether options rising on several derivatives exchanges since mid-May. A rise in the put-call ratio is often considered bearish because it means more traders are buying puts compared to calls. Put options are typically purchased when a trader expects the price of an asset to fall, as it gives the right to sell an asset at a specific price.
The increased Ether put-call rate follows the U.S. Securities and Exchange Commission’s approval on May 23, not the launch, of a spot Ether exchange-traded fund. The launch of these financial products on exchanges has been delayed.
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