Bitcoin Faces Unprecedented Price Swings Amidst Record Volatility Signals and SEC ETF Decision: Bifi

Derivatives traders are on high alert as signals from the options markets indicate the potential for unprecedented volatility in the Bitcoin market.
According to insights provided to CryptoNews by Bitfinex analysts, the expectations for volatility are currently higher than any observed throughout the entirety of 2023.
The anticipation of significant price moves comes in the midst of a surge in options trading volumes recorded in December. Traders are keenly awaiting a pivotal decision from the U.S. Securities and Exchange Commission (SEC) regarding the approval of numerous proposed spot Bitcoin exchange-traded funds (ETFs).

Traders are Bracing for Heightened Volatility

The Bitfinex analysts emphasized the surge in short-term options implied volatility on January 2nd. This sharp rise follows one of the largest expiration events in December, contributing to an atmosphere where traders are preparing for heightened volatility in the Bitcoin market. The imminent decision from the SEC on Bitcoin ETFs adds to the uncertainty, with market participants closely monitoring the regulatory landscape.
As per Glassnode data, the at-the-money implied volatility for Bitcoin reached a multi-month peak, surging to 70.1% on Tuesday.
Examining specific data from Deribit, the analysts highlighted that the top strike price by volume over smaller, cherry-picked timeframes could be $60,000.

However, the top strike price by open interest stands at $50,500, and the largest open interest by expiration date points to January 26th. These details provide insights into the potential price levels that traders are closely watching in the options market. Analyst noted:

“Crypto options volumes hit an all-time high in December, indicating a growing interest in the sector. On December 29th, half of the options positions expired, in one of the largest expiry events ever, but due to the ETF news, overall implied volatility rose instead of falling. IV hit a high of 67.6%,spiking above historical volatility of 41.1%.”

At the time of writing, Bitcoin is trading at $43,609.14, nearly 2.3% up in the last seven days.