• The U.S. government debt discussion and banking sector stress are contributing to a perfect storm of higher volatility in the markets.
• Bitcoin’s 40-day historical volatility does not usually remain below 40% for long, so traders can take advantage of this potential uptick in volatility by using bitcoin options.
• Traders can profit from bitcoin price moves on either side by understanding how to use these instruments correctly.
U.S. Government Debt Discussion Causes Volatility Spike
The traditional market analysts have started calling for a volatility spike due to the United States government debt discussion. Moreover, signs of stress coming from the banking sector surprised investors after the U.S. Dollar Index (DXY), which measures the U.S. dollar against a basket of foreign currencies, reached its lowest level in 12 months at 101 on May 4th 2021. Stock market and macro analyst Markets & Mayhem posted a chart from Deutsche Bank that correlates historical government spending and debt concerns with spikes in the stock market volatility, highlighting the potential for an increase in volatility as discussions around raising the debt ceiling continue over the next few weeks or months.
Bitcoin Price Could Be Impacted By Increasing Volatility
While one cannot predict whether Bitcoin’s price will be positively or negatively impacted by increasing levels of volatility, it is worth noting that Bitcoin’s 40-day historical volatility does not usually remain below 40% for long, so traders should start preparing for potentially sharp swings in BTC’s price over the coming weeks.
How Can Traders Profit From BTC Price Moves?
Traders who understand how to use bitcoin options can benefit from potential upticks in BTC’s price movements regardless of direction by taking advantage of increased levels of trading activity surrounding such events as well as using these instruments to hedge their portfolios against downside risk.
What Are Bitcoin Options?
A “bitcoin option” is an agreement between two parties where one party agrees to buy or sell bitcoins at an agreed upon price within a specified period of time or on an agreed upon date in exchange for payment up front or at some other pre-determined point during that period.
As governments around the world grapple with mounting deficits and possible austerity measures, traders need to be aware that we could see increasing levels of volatility across all markets – including cryptocurrencies like Bitcoin – over the coming weeks and months ahead. With this increased instability comes opportunities for savvy traders who understand how to utilize tools such as bitcoin options correctly when navigating these turbulent waters – allowing them to profit from both upside and downside moves within BTC prices depending on their strategy and risk appetite