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Bitcoin Market Is Getting Better at Hedging Price Risk: Skew

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  • Alex Dovbnya
    📰 News

    The implied volatility of Bitcoin options has been tanking in tandem with the asset's price

Bitcoin Market Is Getting Better at Hedging Price Risk: Skew
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According to London-based blockchain research boutique Skew, the Bitcoin term structure steepened in the fourth quarter of 2019, which means that the options market is getting more sophisticated when it comes to hedging price risks.

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Bitcoin is becoming less volatile

The asset's implied volatility, an important metric for pricing options contracts, has been dropping ever since the BTC price hitting its year-to-date peak of $13,700 back in June.   

As of now, Bitcoin is also driven by speculators who chase significant gains by betting on the volatile and nascent digital asset. However, BTC is actually becoming more stable. Its realized volatility, which reflects the actual price movement instead of the market's expectations, reached its current peak at the end of December, which coincided with the price massive price rally. Back then, the average daily price change was about 8 percent.      

When Bitcoin's at-the-money implied volatility (ATM IV) dropped below 60 percent for the first time since May, BTC suddenly made a wild upside move that took place on the same day.   

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Bitcoin options market is growing

As Skew pointed out in its 2018 research paper, the curve will continue to steepen when the BTC options market becomes more established. Cryptocurrency miners will remain the main source of buying flows, which is typical for major commodity markets.

As reported by U.Today, ICE-backed Bakkt is expected to launch Bitcoin options on its futures on Dec. 9. CME Group came up with a similar plan -- the Chicago-based futures trading giant will roll out Bitcoin options in Q1 2020.     

Traders are increasingly turning to Bitcoin derivatives, such as options and futures, that can offer higher gains, but they incur significant risks.   

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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BTC, LTC, XTZ, TRX Price Prediction - Can Bulls Fix the Ongoing Growth?

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  • Denys Serhiichuk
    📈 Price Predictions

    Has the bearish trend finally come to the end?

BTC, LTC, XTZ, TRX Price Prediction - Can Bulls Fix the Ongoing Growth?
Cover image via www.tradingview.com

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of U.Today. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.

The bears are continuing to apply pressure on the main cryptocurrencies. However, the altcoins are testing their support levels. If the bulls manage to maintain these levels, then one should expect a good rebound ticking upwards.

Top 10 coins by Coinstats

Below is key information for Bitcoin (BTC), Litecoin (LTC), TRON (TRX), and Tezos (XTZ):

Name

Ticker

Market Cap

Price 

Volume (24H)

Change (24H)

Bitcoin

BTC

$136,870,530,589

$7,566.87

$17,335,699,425

2.67%

Litecoin

LTC

$2,935,607,698

$46.02

$2,553,535,223

3.02%

TRON

TRX

$981,336,616

$0.014717

$970,524,056

0.18%

Tezos

XTZ

$926,823,387

$1.40

$50,581,767

8.84%

BTC/USD 

Yesterday's symmetrical triangle was broken up. There was solid growth, but the sellers did not step aside. This is evidenced by the candles' long shadows. Buyers are able to maintain the price at $7,500 but are unable to break through the $7,650 mark. So far, nothing is clear as to furthering the priority of movements in the market.

BTC/USD chart by TradingView

On one hand, the candles' large shadows and small volumes of growth indicate seller dominance. BTC may trend downwards to $7,300. If it breaks through that level, then BTC will go to $6,900-$7,100. 

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On the other hand, the price has broken the aforementioned trend line, which has held the cryptocurrency's rate back since October. In general, BTC is expected to drop to $7,300, but if the cryptocurrency is fixed above $7,650, then BTC will move to $7,800.

At press time, BTC is trading at $7,544.

LTC/USD 

LTC is trading in accordance to our recent forecast between the $42-$52 range. Its rate has increased by 2.68% since yesterday.

LTC/USD chart by TradingView

Looking at the 4H chart, LTC touched the local bottom at $42. In terms of its nearest price scenario, the bulls are dominating over the bears. The Moving Average Convergence/Divergence (MACD) is bullish, and the closest mark that LTC might reach is $50. If the current forecast comes true, then the quotes will move based on the curve pattern as outlined on the chart.

At press time, LTC is trading at $45.73.

TRX/USD 

TRX has also followed our previous scenario as the its price of $0.014 has been retested.

TRX/USD chart by TradingView

Looking at the 1D chart, the bearish trend remains even on a short-term basis. TRX has currently formed a head and shoulders pattern and is likely to move downwards due to the low trading volume. The relative strength index (RSI) line is also going down, with the nearest price target being at $0.135.

At press time, TRX is trading at $0.0147.

XTZ/USD 

XTZ has had the biggest gains today. Its rate has rocketed up by 8.46% in the last 24 hours.

XTZ/USD chart by TradingView

Despite the sharp growth, this altcoin cannot be considered the start of a bullish trend. XTZ is about to roll back to its nearest support level of $1.35. Moreover, the RSI is located on the edge of the oversold area, suggesting an upcoming decline.

At press time, XTZ is trading at $1.3978.

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About the author

With more than 5 years of trading, Denys has a deep knowledge of both technical and fundamental market analysis. Mainly, he has started his blog on TradingView where publishes all relevant information and make predictions about top coins.
Thus, his experience is backed up by working in top blockchain related companies such as W12, Platinum Listing & ICO Advisory, ATB Coin, and others.

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