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The bullish rally at the end of July was pretty significant for Ethereum. The valuation jumped above $250, $300, $350, and eventually surpassed $400 after more than 2-years. Ethereum’s rally was so dominant that options trader expected Ethereum to impute more volatility than Bitcoin itself.

ETH-BTC 3 months realized vol spread on 27th July was a measly 6.5%, which rose up to 36% on September 25th. Surprisingly, the vol spread has retained the same level now, for the past 3 weeks.

ETH-BTC 3 Month Vol Spread hasn’t moved a muscle; Why?

Source: Skew

At first glance, the consistent realized vol spread between Ethereum and Bitcoin could be due to a lack of push and pull between Ethereum and Bitcoin option traders. While the chart might seem like an anomaly, it is important to note that between September 25th and October 15th(i.e when the spread was 36%), ETH and BTC both resulted in periods of both pump and dump.

However, if the realized volatility chart of ETH-BTC is observed for a 1-month, 6-month time frame, a blatant drop can be pictured since the start of October.

Clearly representing that Ethereum is slowly expected to be less volatile in comparison to Bitcoin, the short-term volatility structure and the half-yearly trend was pretty transparent. Hence, it can be inferred that the consistent vol spread at 36% is due to the time-frame of that spread. The volatility spread calculated between Ethereum-Bitcoin on a time period of 3 months appeared balanced due to consistent hikes and drops, hence the 3M vol spread did not alter during this trading period.

Now, considering the trend is moving towards higher Bitcoin volatility, the market might soon witness a dip on the 3-month chart itself, with the vol spread dropping below 36%.

Implied Volatility Spread on a rise for ETH-BTC 

Source: Skew

Now, looking at the Implied Volatility spread between ETH-BTC, the chart indicated a rise which suggested that Ethereum’s volatility is further diverging away from any impact off Bitcoin’s price variation. While the asset might concur a divergence, the collective options market was still dominated by Bitcoin options as noticed in the realized vol spread charts.

For Bitcoin Options, it is a welcome break, since ETH options were incurring high Open-Interest over the past few months. With the drop in Ethereum’s volatility, Bitcoin Options might be the marquee trade yet again.

AMB Crypto , 2020-10-16 18:35:36 ,

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NewsBlock © 2019 - 2020 All rights reserved.

NewsBlock © 2019 - 2020. All rights reserved.


While Bitcoin’s price seemingly moves without rhyme or reason — collapsing by dozens of percent and embarking on face-melting rallies on a whim — the cryptocurrency market is filled to the brim with fractals.

Related Reading: Analyst: Bitcoin Price Likely to Fall to Low-$8,000s as Chart Remains Weak

A brief aside: A fractal, in the context of technical analysis and financial markets anyway, is when an asset’s price action is seen during a different time. This form of analysis isn’t that popular, but it has proven to be somewhat valuable in analyzing Bitcoin.

One recent fractal popularized by a well-known cryptocurrency trader is implying that BTC is going to return to the low-$7,000s in the coming days.

Bitcoin Fractal Implies Retracement to Low-$7,000s

A well-known crypto trader going by “Tyler Durden” on Twitter recently posted the chart below, which shows that a Bitcoin price fractal may be playing out. The fractal has four phases: horizontal consolidation marked by one fakeout, a surge above the consolidation phase, a distribution, then a strong drop to fresh lows.

If the fractal plays out in full, BTC could reach the low-$7,000s again, potentially as low as $7,100. This would represent a 20-odd percent collapse from the current price point of $8,800.

It isn’t only a fractal that is hinting Bitcoin has the potential to visit its lows. As we reported on Saturday, Bloomberg believes that if the GTI Vera Convergence Divergence Indicator flips red, a downtrend could push the cryptocurrency back to $7,300.

Related Reading: Stephen Colbert Pokes Fun at Bitcoin in Monologue: Mainstream Gone Wrong?

Can Bulls Step In?

But again, many believe it is irrational to have such bearish interpretations of the cryptocurrency’s chart at the moment. As reported by NewsBTC earlier, Popular crypto trader Mayne recently noted that the “people waiting for $6,000” are irrational. He quipped that Bitcoin retracing and consolidating after its fourth-biggest bull move in history ($7,300 to $10,500, a 42% gain) is perfectly par for the course, but noted that it’s totally possible we can go lower from $8,800.

The medium-term technicals support this.

Trader and CoinTelegraph contributor FilbFilb found that by the end of November or start of December, the 50-week and 100-week moving averages will see a “golden cross,” which he claims is far more significant” for the Bitcoin market that other technical crosses.

Also, a Bitcoin price model created using Facebook Prophet machine learning found that the leading cryptocurrency is likely to end the year at just over $12,000. What’s notable about this model is that it called the price drop to $8,000 months in advance, and forecasted a ~$7,500 price bottom for BTC.

To put a cherry on the cryptocurrency cake, Crypto Thies observed that when Bitcoin bottomed at $7,300, it bounced decisively off the 0.618 Fibonacci Retracement of the move from $3,000 to $14,000, which correlates with the two-week volume-weighted moving average. He added that summer 2019’s consolidation was marked by Bitcoin flipping major resistances into support levels, implying that a bullish reversal and subsequent continuation is likely possible in the coming weeks.

Featured Image from Shutterstock


Nick Chong , 2019-11-10 12:00:38

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