The implied volatility It is a metric for evaluating the market forecast. Monitoring the futures market and options trading is usually a good way to assess implied volatility. Bitcoin is expected to have significantly lower volatility after halving.
Bitcoin’s implied drop in volatility
The long-awaited third Bitcoin halving came and went this week. BTC’s annual inflation rate is now lower than that of all other Fiat currencies, which will only make it more attractive in the long run. This is partly why Paul Tudor Jones recently decided to invest in Bitcoin.
However, in the short term, traders expect Bitcoin’s volatility to decrease. As skew (@skewdotcom) writes on Twitter, the implied volatility has decreased after halving.
However, it should be noted that implied volatility only shot up last weekend due to falling prices. It has now returned to last week’s level.
Bitcoin’s actual volatility has returned to a “normal” level since last month. March was an exceptional month for Bitcoin’s volatility, but things have cooled since then. Given the expectations of implied volatility, we can expect price movements to cool further in May.
Had the price of halving been set before?
With BTC still unable to recover the $ 9,000 price after a sharp drop last weekend, many are wondering: Was the price set yet?
Historically, large price movements have occurred after halving, not before. The event itself is bullish over longer periods. Therefore, expectations that Bitcoin would skyrocket in anticipation of a halving were wrong. In fact, the opposite happened because too many expectations were placed on the event itself. This weekend, the cryptocurrency fell below $ 9,000, resulting in liquidations of $ 1.3 billion.
Now traders expect things to cool down, and for good reason. The past few days have been particularly volatile for Bitcoin.
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