Bitcoin derivatives traders are bracing for increased volatility

Derivatives traders are expecting “unprecedented” volatility in the Bitcoin market, Bitfinex analysts said.

As the industry anxiously awaits word from the U.S. Securities and Exchange Commission (SEC) on more than 10 proposed Bitcoin spot ETFs, analysts say signals from rights markets suggest derivatives traders are expecting higher volatility than in all of 2023 observed levels.

“Traders are bracing for unprecedented volatility in Bitcoin prices, based on signals from the options market.”

The prediction comes amid record options trading volume in December and ahead of possible approval of a spot Bitcoin ETF by U.S. financial regulators.

Bitcoin means volatility spikes

Bitcoin’s implied volatility rose to a multi-month high of 70.1% on Tuesday.

Bitfinex analysts drew attention to a spike in short-term option implied volatility, saying it showed “traders are bracing for greater volatility ahead of the SEC spot Bitcoin ETF decision.”

Implied volatility has reached current highs, above the historical average volatility of 41.1%, according to Bitfinex.

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According to “Block”