In this article, we will cite the analysis and opinions of Joshua Lim, Head of Derivatives at Genesis Trading and former CEO of Circle, and discuss what he said about the volatility dynamics of Bitcoin and Ethereum.
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Mr. Lim touched on Twitter the dynamics of implied volatility in recent months for Bitcoin.
Implied volatility is here taken as an indication of the market’s view of the likelihood of changes in the price of a particular asset.
1/ BTC and ETH long-dated implied vols are plumbing multi-year lows. what is causing this and where do we go from here? a thread: pic.twitter.com/sIhZq6Aky8
— Joshua Lim (@joshua_j_lim) January 15, 2022
The analyst noted that as Bitcoin and Ethereum fluctuate in the middle of the $25,000-$69,000 annual price range for Bitcoin and $1,900-$4,600 for Ethereum, players on the broad are not interested in buying, unless volatility increases further than the current one.
Bitcoin’s implied volatility has fallen from 90 to 70 in less than two months.
This looks like the most drastic correction since early March 2021.
Downside is a buying opportunity:
Historically, when implied volatility metrics are at a bottom and start to rise again, it is a huge positive driver for an asset’s price.
The major reversals were recorded in October 2020 and April 2021 after which bitcoin hit a new price high.
Likewise, with this drop in the price of Bitcoin, Bitcoin may then head to a new price peak within weeks or months, but nothing is certain and this is not investment advice.
Currently Bitcoin, the major cryptocurrency, is trading at $43,040, up 0.25% in the last 24 hours, while Ethereum is adding 0.11% and trying to stay above $3,300.
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