Options data is currently suggesting a limited upside for Bitcoin, as implied volatility has seen a notable decrease following last week’s dramatic Black Friday crash in the cryptocurrency market. Increased bearish activity during the sell-off has led to a surge in put options set to expire on October 31, according to insights from Hendrik Ghys, founder of futures and options exchange Thalex Global.
Bitcoin has managed a small bounce, trading at approximately $113,500—a decrease of about 1.5% over the last 24 hours, as reported by CoinGecko. The volatility surrounding the cryptocurrency has calmed from the initial panic that followed the crash, with implied volatility now hovering in the low 40s for the short term and around 45% for longer durations.
Market makers, who found themselves in a long gamma position prior to the crash, continue in this state. This means they are engaged in a strategy that necessitates selling during market rallies and buying during dips, as a way to hedge their positions against potential losses. Ghys believes that as volatility subsides, these market makers may have opportunities to either reduce or close their positions at more favorable prices compared to last week.
Ryan Lee, chief analyst at Universal Exchange Bitget, offered a cautiously optimistic perspective. While short-term volatility could potentially push Bitcoin down to support levels around $100,000, along with Ethereum potentially dipping to $3,600, Lee views this situation as a necessary correction to eliminate weak hands and prepare for renewed accumulation.
Despite the potential risks in the near term, Lee remains bullish for the long-term future of Bitcoin, predicting it could eventually rebound to around $130,000, with Ethereum reaching about $4,800. He highlighted the positive influence of institutional inflows, citing exchange-traded funds and digital asset treasuries as key components driving potential future growth in the market.
