Bitcoin Inherent Volatility Rises As Nervous Frey Before Halving!

Cryptos are notorious for being volatile. We often see such volatility in the market. As such the underlying volatility for Bitcoin options at present has increased over the past weekend. Bitcoin price has reversed the downward trend. We saw this downward trend last week. A rise in current conditions usually means market participants are less confident about price direction. Moreover, Bitcoin halving is scheduled to be completed in a very short period of time. And this time there is unrest around. When underlying volatility increases, traders are generally willing to pay more to protect existing positions or to speculate on potential price movements.

As we have seen the price of Bitcoin has dropped a lot in the last two days. For example, the price of Bitcoin traded above 71000 dollars two days ago, but we saw the price of Bitcoin coming down to 60 thousand dollars. While global financial markets were rattled by a flare-up of geopolitical risks.

source

Underlying volatility rose the most on contracts expiring in the next two weeks. Expectations of near-term volatility are rising. But the more important point here is that it is probably more bearish in this case. Bitcoin price is currently in a downward trend. Moreover, we always know that there is a major correction during the Bitcoin halving when the price of Bitcoin drops by 30 to 50 percent. Moreover, traders suffer from uncertainty during this time. But are willing to pay more for options to get protection against price changes. They are probably paying a high premium to buy downside protection.

Bitcoin prices have continued to rise since the spot bitcoin ETF was approved earlier this year. To say that this price increase has been very one-sided but the price has increased by a range in the last month. Most traders are now focusing on what is known as the Bitcoin Halve. As we know during this bitcoin halving basically miners reward is halved. When so-called miners verify transactions on the blockchain, the rewards in the form of additional tokens will be cut in half.

If we look closely at previous halvings, we see that the short-term effects are mixed. When the long term was bullish. In two of the previous three halves, prices rose one and three months later. During each bitcoin halving, there is a major correction in the price of bitcoin, and during that time the price of bitcoin drops by about thirty percent to fifty percent. Moreover, another important point is that prices have increased after all three halves, nine and 12 months. Now currently Bitcoin's underlying volatility has risen as a nervous frenzy before it halves.