- The Bitcoin Volmex volatility index reached 97.14 on August 5, its highest level since November 2022, as Bitcoin briefly fell below $50,000
- Traders are actively buying put options to hedge against further declines, reflecting a bearish sentiment despite a recent price recovery
- While some traders see the current dip as a potential buying opportunity, others anticipate further drops, with differing views on Bitcoin’s short-term price movements
A major Bitcoin price volatility index touched the 20-month high after Bitcoin tested sub-$50,000 levels. Some futures traders expect that the price may go lower still which given recent events may seem entirely possible while others are of the opinion that this is actually the “best buying opportunity of 2024”.
Bitcoin Volatility Peaks as Price Dips Below $50K; Traders Speculate on Future Movements
Key Bitcoin volatility touched the 20-month high after Bitcoin dipped below the $50k mark and now futures traders think the price could cool off even further. Recall, pseudonymous trader Yoddha said it could be “the best buying opportunity of 2024. ”
Specifically, the Bitcoins’ Volmex indicated volatility index was at 97. 14 on the 5 th of August, the same day that the cryptocurrency wanted to, and was, selling at $49,813, as recorded by CoinMarketCap. It is the highest level since November 2022, what can be associated with the FTX exchange’s bankruptcy situation.
Put-to-Call Volume Ratio Indicates Bearish Sentiment
Bitcoin is up from its bottom since trading at, USD 56,676 at the writing of this article, nevertheless futures traders are insisting on possible further selloffs.
The put-to-call volume ratio measures the demand for Bitcoin put options versus call options. Currently, it stands at 46.94% for calls and 53.06% for puts in the past 24 hours, resulting in a put-to-call ratio of 1.13, according to CoinGlass data.
“The call skew is extremely well-priced. This could be a sign that the market is overextended,” Hindi added.
He believes there might be more declines but doubts that the USD 45,000 level will be “broken.”
“If we get to trade at that level will depend on how far we are from the end of the Japanese yen carry trade unwinding which is nine percent of the global trade,” he said.
However, another Indicator, Bitcoin option volume, dropped by 39.73% in 24 hours on August 6, signaling that futures traders are unsure of Bitcoin’s price direction.
Some Traders Are Bullish
Not all the traders expect a long term bear market. Some of the stakeholders demand a flat price and even short term recovery. Claiming to be a crypto analyst, the pseudonymous trader RektProof left a X post on August 6 that read as follows: “An Aggressive sell-off would mean the price would stop for a moment and give us a range.”
“Expect a BIG reversal soon,” posted Bitgrow Lab founder Vivek Sen in another post.
Conclusion
As bitcoin experiences high volatility and mixed sentiment among traders, the market remains divided between expectations of further declines and potential recovery opportunities.
With options indicators showing bearish sentiment and declining options volume, bitcoin’s near-term future remains uncertain, but some analysts believe a positive reversal is possible.
