Bitcoin’s Implied Volatility Rises as Nerves Fray Before Halving
- An increase usually means participants are less confident
- Price swings are increasing as geopolitical risks climb
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One of the options market’s closely watched indicators is starting to show that speculators are getting nervous ahead of a once-every-four-years Bitcoin code adjustment that has been bullish for the cryptocurrency in the past.
The implied volatility for Bitcoin options jumped last weekend, reversing a downward trend seen in the prior week, Kaiko Research said in a report. An increase generally means market participants are less confident about the direction of prices, said Adam McCarthy, a research analyst at Kaiko. When implied volatility rises, traders are usually willing to pay more to protect existing positions or to speculate on potential prices moves — up or down.