Bitcoin Options Signal Potential Summer Downturn, Analysts Warn

Analysts foresee a potential lull in Bitcoin derivatives trading activity over the summer months, prompting traders to prepare for a slowdown.

Ecem EFE02/05/20241 Mins read356

Bitcoin Options Signal Potential Summer Downturn, Analysts Warn

Crypto News- As temperatures rise, so does the anticipation of a cooling trend in Bitcoin markets, suggests analyst Jag Kooner from Bitfinex. “Summers typically usher in low volatility periods, prompting traders to adjust their positions accordingly,” he remarks.

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Bitcoin Options Signal Potential Summer Downturn, Analysts Warn

Kooner highlights a significant drop in bitcoin implied volatility since mid-April. Graphs from The Block’s Data Dashboard illustrate this decline, with at-the-money options’ implied volatility plummeting from over 77% to below 60% across various expiry periods.

Ether Follows Suit: Regulatory Uncertainty Spurs Volatility Calm

The trend isn’t exclusive to Bitcoin; Ether is experiencing a similar calming effect on volatility. Bartosz Lipiński, CEO of Cube.Exchange, attributes this to traders seeking clarity on Ether’s regulatory status in the U.S. “Uncertainty often prompts traders to adopt a risk-off approach, awaiting developments from the regulatory front,” he explains.

Lipiński Warns of Summer Paradox: Low Trading Volumes May Fuel Volatility Spike

As summer settles in, Bartosz Lipiński, CEO of Cube.Exchange, sounds a note of caution amidst the tranquil market atmosphere. While summers traditionally invite subdued trading activity, Lipiński highlights a counterintuitive phenomenon: lower volumes can paradoxically give rise to heightened volatility, courtesy of liquidity gaps.

Drawing parallels to the crypto market’s historical episodes, Lipiński invokes the memories of 2017’s DeFi summer and the ensuing bullish surge. These instances serve as poignant reminders of the profound impact that diminished liquidity can exert on crypto markets, he emphasizes. Thus, Lipiński urges vigilance amid the serene summer backdrop, advocating for a keen awareness of the latent volatility that may lurk beneath the surface.

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Ecem EFE

Since 2022, Ecem has been creating digital content, combining her passion for technology with writing. Continuing her education in the Mathematics department, Ecem focuses on producing in-depth content on areas such as blockchain, artificial intelligence, and cryptocurrency. She aims to simplify these topics and present them to a wide audience, sharing valuable insights into the crypto industry through her writing. With her innovative content, she strives to raise awareness in the digital world.

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