Bitcoin, the world’s largest cryptocurrency by market capitalization, was down 9.7% as of press time Friday. BTC was below the 10-hour moving average and the 50-day, a bearish signal for market technicians.
Neil Van Huis, director of sales and institutional trading at crypto market maker Blockfills, says “consolidation,” a period of low volume and subsequent price discovery due to lack of liquidity, might be a market factor this weekend.
In the bitcoin derivatives market over 16,700 BTC is centered on a $50,000 strike price, the highest open interest. However, the split between puts and calls is almost even. A put is a right but not an obligation to sell an asset while a call is the right but not an obligation to buy an asset – both within a specific time frame, known as expiration.
It’s an intriguing development because bitcoin has not been at the $50,000 price level in over a week and it’s possibly a sign smart options traders are taking both sides of the trade at that level.
“The part that stands out the most is that volatility has exploded recently, with many assets experiencing over 200% realized, which is huge,” said Rich Rosenblum, president of crypto market maker GSR. “Then, at the same time, BTC volatility is elevated vs. its lull a few weeks ago, but certainly muted relative to the rest, staying at under 100%.”
Greg Magadini, chief executive officer, Genesis Volatility, noted that ETH’s “DVOL” metric, which is a volatility measure similar to traditional markets’ VIX and tracked by options exchange Deribit, is up to 180. It’s record high was Thursday, at 190. He says realized volatility, which is derived from analyzing historical returns, is now priced into the market.
“Although we’ve come down from peak realized volatility seen in the past few days, over +300%, volatility is known to cluster,” said Magadini. “The options markets are pricing in over +100% implied volatility for all expirations and about 150% for near-dated options.”
Ether, the second-largest cryptocurrency by market capitalization, was trading around $2,363 as of 21:00 UTC (4:00 p.m. ET), slipping 15.5% over the prior 24 hours. The asset is below the 10-hour moving average as well as the 50-day, a bearish signal for market technicians.
Nick Mancini, research analyst at crypto sentiment analytics platform Trade the Chain, says major blockchain assets like bitcoin and ether are still seen positively, despite recent price dumps and volatility jumps.
The bullish thesis may be holding overall, but traders have clearly been losing some interest in ether versus other cryptocurrencies. Ether’s dominance, its share of the greater cryptocurrency market, has started to drop. After hitting a 2021 high of 20.61% May 15, ETH dominance has started to falter, below 18% share and down 2% the past 24 hours as of press time.
This content was originally published here.