News
Bitcoin Breakout in the offing? Options Markets Signal Imminent Volatility Increase
Is a Bitcoin breakout approaching?
QCP Capital recently released a new market analysis offering intuition what could be in store for the price of Bitcoin (BTC) — more importantly, in which direction could go onThese new insights focus in particular on the options market.
Market Anticipates Move: Bitcoin Options Analysis
QCP Capital’s latest report has identified an interesting pattern in the Bitcoin options market, highlighting an increase in BTC-specific front-end volatility. This 5-point increase in short-term volatility indicates that traders are preparing for larger price swings in the coming weeks.
Furthermore, the increasing number of upside risk reversals suggests growing expectations among traders that prices are likely to continue to rise favorably, influencing market sentiment.
According to QCP Capital, this combination of higher implied volatility and attractive risk reversals sets the stage for a potential bullish price rally. QCP analysts specifically noted:
Bitcoin front-end volatility increased by 5 points this morning, with risk reversals favoring the upside, signaling the market’s anticipation of potential upside volatility.
While Bitcoin has shown some signs of recovery as the market digests these fundamental analytical predictions, volatility persists on the upward path. In particular, amidst the gradual rebound, the asset still seems to be pulled by the bears.
Previously, BTC had traded as high as $59,313; however, at the time of writing, the asset has now erased most of its gains from the day and is now trading at $57,766, just a few dollars away from its 24-hour low of $57,127.
This continued volatility occurs against the backdrop of a broader context. financial market which is constantly changing, with a particular focus now on the publication of the Consumer Price Index (CPI). QCP noted:
With the perceived reduction in supply, a weaker CPI could act as a catalyst to break out of this situation. [current] range, especially strengthened by the upcoming launch of ETH spot ETF trading next week. We have identified an interesting upside risk-reward opportunity via Digitals.
Long-term BTC holder sentiment
Furthermore, despite all this, the underlying confidence among long-term Bitcoin investors remains unshakeable. According to the latest on-chain data According to Glassnode, the steepest price corrections of this cycle are not even convince these investors sell.
Glassnode reported that despite several market declines, such as Bitcoin’s plunge to $53,500 last week, long-term holders are more determined than ever and have not changed their aspirations in months.
The data suggests that only 36% or perhaps even less of Bitcoin’s total capital moved during this week’s sell-off events, substantially lower than in past major events. market capitulations with an involvement of more than 60%.
This data suggests solid behavior that supports a well-established underlying market structure, even as BTC goes through one of its most challenging post-halving cycles ever.
Featured image created with DALL-E, chart from TradingView