- A $1 billion drop was observed in Bitcoin options.
- The Estimated Leverage Ratio is at its lowest level since the end of 2021.
According to blockchain metrics, volatility in Bitcoin (BTC) price could decrease in the near future.
Volatility Could Decrease in Bitcoin!
When it comes to price movements in Bitcoin (BTC) in the coming weeks, the derivative market may be less exciting. According to Bitfinex analysts, Bitcoin options indicate a decrease in volatility, while a large amount of leverage has been withdrawn.
According to a research note published on Monday, Bitcoin derivatives markets contributed significantly to last week’s volatility with abundant leverage. Now that leverage has disappeared, we can enter into horizontal prices going forward.
There has been a significant increase in interest in Bitcoin and Ethereum derivatives this year. However, analysts noted that open positions have fallen in the last three weeks, leading to the mandatory closure of both short and long positions.
According to data, the open position of BTC options fell from around $12.76 billion on April 11 (three weeks ago) to near current levels of $11.48 billion.
“Estimated Leverage Ratio” measures leverage in the Bitcoin market. The ratio fell to 0.195 last week – an unprecedented level since December 20, 2021. At that time, Bitcoin fell by 12% in a few days, from $56,500 to $49,500, which coincided with the decrease in leverage.
Implied Volatility, which was set at nearly historic lows at the beginning of this year, ranging from 48% to 55% for maturities of 30, 90, and 180 days, has fallen. Implied Volatility shows how the market predicts the future volatility of the underlying asset, in this case Bitcoin. It is based on the current price of option contracts.
Both measurements support the theory that Bitcoin is in a “transition phase” marked by a pause in price movements and fewer short-term speculators, as well as decreasing leverage.
According to Bitfinex analysts, “Historically, during transition phases for Bitcoin, the elimination of speculators and bitcoin ‘tourists’ is associated with the market forming a short-term bottom.”
Bitfinex says this is usually followed by a recovery, and then a new wave of investors and speculators driven by price momentum and FOMO (fear of missing out) enters the market.
According to Analysts, Volatility in Bitcoin Could Decrease in the Coming Weeks! The news was first published on CoinOtag.
