ETC Group’s Research Director, Andre Dragosch, highlighted the increased volatility in the futures market as Bitcoin investors prepare for significant price movements this week. This anticipation is linked to the uncertainty surrounding the potential approval process of a spot Bitcoin ETF.
Dragosch pointed out the steep premium on options expiring on January 5, suggesting that futures investors are expecting higher uncertainty this week, possibly due to anticipated decisions from the SEC.
Gordon Grant, a crypto futures market investor, observed that volatility rises when more people enter the market and purchase options. He noted a significant increase in volatility over the weekend due to demand outstripping supply, despite the spot price of Bitcoin remaining stable.
According to data from The Block’s Data Dashboard, the implied volatility for Bitcoin price movements reached a yearly high of 86.3%, indicating market expectations of a potential price event.
Ruslan Lienkha, Chief of Markets at YouHodler, suggests that the surge in volatility could be a result of the market’s anticipation of significant capital inflows into the Bitcoin market if ETF applications are approved. He mentioned that while Bitcoin is not as liquid as fiat currencies or commodities, an influx of billions of dollars could rapidly increase Bitcoin’s price by 50% to 100%.