Is Now The Time To Buy Bitcoin Or Ethereum Options?
Those that bet on the price movements or volatility in the cryptocurrency market may be in for an "interesting" time, as per Genesis Volatility.
What Happened: Genesis Volatility in a note took stock of the implied volatility and realized volatility in both Bitcoin (BTC) and Ethereum (ETH).
Implied volatility is a measure of the market’s view of possible changes in an asset’s price and can be used to project future moves as well as supply and demand.
Realized volatility, also known as historical volatility, on the other hand, is a measure of the past movement of an asset over a given period of time.
Bitcoin's “short dated option IV is trading below RV [realized volatility],” wrote Genesis. “There are opportunities in buying volatility in this type of environment.”
BTC's Implied Volatility and Historical/Realized Volatility. Courtesy, Genesis Volatility
On ETH, Genesis wrote, Ether’s implied volatility is trading at a “HUGE discount” to the realized volatility.
ETH's Implied Volatility and Historical/Realized Volatility. Courtesy, Genesis Volatility
Ethereum crossed the $3,000 mark on Monday for the first time in its six years of existence. The cryptocurrency touched a new all-time high of $3,450.04 on the same day.
At press time, ETH traded 7.12% higher at $3,250.81. The apex cryptocurrency BTC traded 3.89% lower at $55,791.56.
Why It Matters: Genesis noted that buying options in an environment where ETH is making new all-time highs is “extremely interesting.”
ETH’s upwards march has come at a time where several altcoins are outperforming BTC, a trend which some analysts describe as alt season.
ETH has also gained momentum from the Decentralized Finance, or DeFi, arena as well as the hype surrounding non-fungible tokens.
In terms of yearly-to-date gains — ETH has far outpaced BTC with the former gaining 335% since the year began and the latter up 91.98%.
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