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Options data points to a quiet summer ahead for crypto market, says QCP Capital

Options data points to a quiet summer ahead for crypto market, says QCP Capital

The BlockThe Block2024/06/14 11:34
By:Brian McGleenon

Analysts from QCP Capital predict a summer lull in the crypto market, anticipating lower trading volatility for bitcoin based on options data.The analysts added that ether options are currently exhibiting higher implied volatility compared to bitcoin options.

According to analysts, the distribution of bitcoin and ether options suggests that the crypto market may be on the verge of a summer lull in trading activity.

"We are in for a quiet summer, with a lower volatility environment and no catalyst to drive the market either way, QCP Capital analysts stated in a report released on Friday.

QCP Capital said that traders may consider accumulation as a strategy in anticipation of "the long, quiet summer, especially for ether."

They further predicted that there will be no immediate significant price movements for ether in July, "with Gensler expecting the spot ether exchange-traded fund (ETF) approval to happen late summer." 

Ether option implied volatility trading higher than bitcoin

The QCP report noted that traders are expecting comparatively more price action from the second largest digital asset by market cap in the coming months. However, the analysis added that any higher volatility premiums for ether over bitcoin could decrease as the market prices in spot ether ETF S-1 Form approval .

"Currently ether implied volatility is trading at a 10 vol premium to bitcoin, and we expect the spread to narrow with ether overwriters returning as we wait in anticipation of an S-1 Form approval late summer," the QCP Capital analysis said.

This higher implied volatility in ether options observation aligns with  The Block's Data Dashboard , which indicates that the current levels of implied volatility for at-the-money (ATM) ether options have remained elevated since the U.S. Securities and Exchange Commission (SEC) approved spot ether ETFs on Thursday, May 23. This is particularly true for ATM ether options with expirations at the end of August and beyond.


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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