Bitcoin Volatility Plummets, Ethereum Skews Deepen: QCP Report

This week, the QCP Weekend Brief noted that the crypto markets saw a large compression in volatility levels. From 70% to 50%, Bitcoin’s volatility showed a relative calm following its recent turbulence. However, this shrinking of volatility also brought about a deepening downside skew in Ethereum risk reversals, with front-end breaching -13%.

Analysts have been quick to point out that this downgrade can be seen as reflecting expectations for postponed SEC approval on an Ethereum spot ETF. Uncertainty around how such a product will be regulated has made some investors unsure about what lies ahead for Ethereum in the short run.

Traders wonder if the calm-down of volatility means they don’t believe in the overall crypto bull market anymore or if it’s just a rest before going higher. This is still up for debate, but there are some good things coming which might make people optimistic again.

For example, in one week from now we will have spot Bitcoin as well as Ethereum ETFs launching in Hong Kong – this would be quite an event for Asian crypto! These new investment products are getting a lot of attention because many think that they could let lots more institutional money from Asia come into the crypto space.

 Bitcoin and Ethereum Accumulator Strategies

For traders that still believe in Bitcoin and Ethereum’s long-term success, this flat market might be a great time to add to their long positions. One way to do this is by using options with longer expiration dates due to the increased volatility further out on the curve. The December options, for example, trade 15% higher than those expiring in May and provide an attractive entry point for anyone who wants exposure.

More specifically, what brokers have their eyes on is a Bitcoin accumulator strategy that entails buying weekly Bitcoin calls at a strike price of $51,500 – which is 20% lower than the current spot price of $63,700. This trade’s upper barrier has been set at $73,500. As for Ethereum accumulators, they seek purchasing weekly calls at a strike price equaling $2,450 i.e., 22% less than its present value ($3,140), with an upper barrier being $3,625.