An early rally Monday pushed bitcoin current price over $11,000; the ethereum options market expects volatility in the short term.
Bitcoin’s price was trading around $10,800 Monday, after a rally at 00:00 UTC (8 p.m. EDT Sunday) that pushed the leader of cryptocurrencies as high as $10,956 before losing steam.
“In a sign of strength, bitcoin price has held above $10,000 for 63 days now,” said David Lifchitz, chief investment officer for quant trading firm ExoAlpha. “This is the longest time since December 2017 to January 2018.”
“Also, we witnessed KuCoin getting hacked for $150 million this weekend but despite some chop on Saturday as news broke, bitcoin was broadly stable.”
Despite the bullish sentiment, some analysts think bitcoin current price cannot get past $11,000. “After the pause BTC took for the weekend, bitcoin is currently on a bullish impulse,” said Alessandro Andreotti, an Italian over-the-counter crypto trader. “It could easily surpass $11,000, but it could easily be a bear trap so we must be careful.”
“Bitcoin continues to range between $10,000 and $11,000 after dropping to $10,100 amidst equity and gold weakness in the past week,” said Cindy Leow, portfolio manager for quant firm 256 Capital Partners. “With quarter-end coming up, we might also see some BTC rebalancing or profit-taking happening amongst hedge funds this week.”
In the derivatives market, Leow points to the lack of overall activity there as a signal many users are simply waiting out the market. Open interest in bitcoin futures, specifically, remains flat Monday.
The second largest cryptocurrency by market capitalization, ethereum (ETH), was trading around $362 and climbing 2.3% in 24 hours as of 20:00 UTC (4:00 p.m. EDT).
Volatility skew is a measure options users monitor for placing bets at different expirations. The 1-month 25-day volatility skew for ether has been in positive territory for most of September after closely following the 3-month and 6-month for the better part of the past three months, which show volatility in the near future.
256 Capital Partner’s Leow says DeFi has contributed to current increasing short-term volatility in ethereum. “ETH has seen much more reflexive movement in September versus bitcoin, no doubt a result of being the base currency for many DeFi pairs which have had a volatile September,” she said.
Vishal Shah, an options trader and founder of derivatives exchange Alpha5, thinks this indicator signals options traders would have different strategies depending on expiration since short-term ether volatility is expected to continue. “This creates a distinct opportunity on calendar risk reversal spreads, and a part of this trade would naturally involve rich ETH puts in the short-term dates versus cheap ones in the long-term dates.”