• Bitfinex Alpha report revealed that crypto traders are bracing for “choppy waters” due to Bitcoin’s sudden plunge after a languid period.
• On-chain data analyzed by researchers at crypto exchange showed a surge and flatline in implied and historical volatility metrics.
• Last week, Bitcoin’s sudden plunge toward the $25,000 mark left markets reeling with over $1 billion in futures liquidations.
Implied Volatility Outpacing Historical Metric
The latest edition of the Bitfinex Alpha report revealed that cryptocurrency traders are bracing themselves for “choppy waters” ahead due to bitcoin’s sudden plunge after a languid period. On-chain data analyzed by researchers at crypto exchange Bitfinex showed a surge and flatline in implied and historical volatility metrics, suggesting that traders have adjusted their strategies in preparation for impending volatility over the next month at least.
Sudden Price Drop
Last week, bitcoin’s sudden plunge toward the $25,000 mark left markets reeling with over $1 billion in futures liquidations. The asset had enjoyed an almost serene period before the decline as traders sought the next catalyst to trigger a sharp move in the market. This was evident in bitcoin’s open interest indicator which recorded a rapid spike in the days leading to the sudden slump.
Open Interest Wipeout
The downward move was followed by a major open interest wipeout, considered one of the largest in the asset’s history. Roughly $3 billion in open interest was obliterated within a few hours after the crash. Bitfinex said it was one of the largest reductions in day-to-day open interest since December 2021 when BTC hit its all-time high of $69,000.
Crypto Community Adjusting Strategies
While the crypto community is still assessing what caused Bitcoin’s recent price movement, it appears that traders have adjusted their strategies for possible further price swings amid heightened uncertainty about where prices will go from here. Implied volatility outpacing historical metric indicates that traders foresee wilder price swings ahead as they brace for choppy waters over coming weeks and months.
Overall this article discussed how cryptocurrency traders are preparing themselves through various strategies for choppy waters ahead due to Bitcoin’s recent abrupt decline after an extended peaceful period prior to it’s drop down towards$25k USD mark resulting into massive futures liquidations amounting up to $1billion dollars . Open interest wipeouts resulting from this were also discussed as being one ofthe biggest reductions since BTC achieved its all time high back in December 2021 ,causing many investors and traders alike to adjust their strategies amidst increasedvolatility and uncertainty about future price movements .