Bitcoin Block Reward Halving and Increase in Volatility

As Bitcoin’s fourth block reward halving approaches, an increase in market volatility is expected. As implied volatility rises, Greg Magadini, Director of Derivatives Products at Amberdata, recommends a cautious view rather than betting on a rise in volatility before this predictable event. Impact of the Block Reward Halving As the impact of the block reward halving on Bitcoin and miners is carefully examined, it is noted that investors predict price fluctuations before and after the event through trading options and volatility futures. Historical trends show significant price hikes for Bitcoin after each halving. Market Dynamics and Current Situation Magadini highlights the inconsistency between market expectations and real results in major events such as Ethereum’s update and approval of spot Bitcoin ETFs in the US. While Bitcoin’s 30-day implied volatility and volatility risk premium rise, options’ implied volatility might be overpriced with the expectation of the block reward halving. Useful Information […]

Bitcoin Block Reward Halving and Increase in Volatility

As Bitcoin’s fourth block reward halving approaches, an increase in market volatility is expected. As implied volatility rises, Greg Magadini, Director of Derivatives Products at Amberdata, recommends a cautious view rather than betting on a rise in volatility before this predictable event.

Impact of the Block Reward Halving

As the impact of the block reward halving on Bitcoin and miners is carefully examined, it is noted that investors predict price fluctuations before and after the event through trading options and volatility futures. Historical trends show significant price hikes for Bitcoin after each halving.

Market Dynamics and Current Situation

Magadini highlights the inconsistency between market expectations and real results in major events such as Ethereum’s update and approval of spot Bitcoin ETFs in the US. While Bitcoin’s 30-day implied volatility and volatility risk premium rise, options’ implied volatility might be overpriced with the expectation of the block reward halving.

Useful Information for the Reader

An increase in market volatility is likely as Bitcoin’s fourth block reward halving nears.
Investors aim to predict price fluctuations through options and volatility futures.
Inconsistencies have been observed between market expectations and real results in previous major events.
An increase in Bitcoin’s 30-day implied volatility and volatility risk premium has been noted.

Bitcoin is currently trading above $72,000 and has experienced a 4% increase in the last 24 hours. This indicates a significant recovery after the recent low. Magadini’s recommendation is for market participants to carefully monitor reactions to events and the complex nature of the cryptocurrency market.

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