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The implied volatility of Bitcoin is rising sharply and that's when the whales make a profit

October contract value fluctuations on CBOE hit a record low

The implied volatility for Bitcoin has skyrocketed – and that's when the market's big traders make a profit.

One month's Implied Volatility for leading digital assets has increased from 55% to 65% since Sunday at midnight, according to data provided by Skew. Implied Volatility is used to measure market expectations of the volatility of a given asset over the next month.

Bitcoin's Implied Volatility. Source: Skew
Bitcoin's Implied Volatility. Source: Skew

As traders prepare for the weak market ahead, Bitcoin price continues to witness a decline. Over the past 24 hours, the coin has dropped more than 4% and is currently trading above $ 7,700 per coin.

Elsewhere, US stocks are seeing heavier losses amid the widespread corona virus disease and concerns about its impact on the economy. Concerns also escalated between OPEC and Russia talks over the weekend, an event that caused crude prices to fall by 30%. At the last test, the Dow Jones also lost more than 1,400 points this morning.

Indeed, the 30-day implied volatility level of the VIX index rose to 62 today, close to the level during the previous financial crisis.

Implied Volatility of VIX indicator. Source: TradingView
Implied Volatility of VIX indicator. Source: TradingView

However, some cryptocurrency traders are surprised that there is no further panic in the market

“It's a normal downward slide,” Darius Sit, a derivatives trader of QCP, told The Block. “Strange.”

Max Boonen, co-founder of B2C2, said the revised growth expectation will have a greater impact on stocks than Bitcoin, which could be played with more optimistic sentiment.

“Stocks are going down a great time because growth expectations have been adjusted much lower,” he said. "Bitcoin does not really depend on economic growth. It is not a stock with dividends. "

For any asset type, the increase in volatility is a good thing for some traders and brokers who thrive in these market conditions. High-frequency traders like Virtu Financial create markets under these conditions and make a profit by the price difference that investors want to buy or sell a stock. As volatility increases, companies can often make more money.

Virtu is a handful of stocks that are in green today, trading up 1.9% at the time of writing.

A similar logic applies to companies that create the cryptocurrency market, industry sources said.

“I doubt everyone in a similar business interests to varying degrees is based on a precise strategy,” Boonen said, adding: “We had a big February.” Since the beginning of March, Boonen said the company has made as much profit as December.

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According to The Block
Translated by ToiYeuBitcoin

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