Bitcoin Options Market: Volatility Declines Amidst BTC Price Pullback

The world’s largest cryptocurrency Bitcoin (BTC) witnessed a sharp 10% correction from its all-time high reaching all the way lower to $65,500. This slump in the Bitcoin price has helped in reducing overall volatility as traders eagerly await the Bitcoin options expiry on Friday.

Bitcoin Options Market Data

According to Greeks.Live, BTC Dvol has fallen below 70%, indicating a continued release of downward pressure on implied volatility (IV) as noted at the end of the previous month. Recent block trading activity has shown a decline, primarily marked by the purchase of call options by whales post the Bitcoin halving. The substantial margin available to these large investors underscores the significance of monitoring their subsequent actions.

Furthermore, the data from Greeks.Live shows that 18,000 BTC options are set to expire, characterized by a Put Call Ratio of 0.64, a Maxpain point at $68,000, and a notional value of $1.2 billion. Today marks the first weekly delivery day following the significant quarterly delivery.

This week witnessed a weaker crypto market performance, with the $70,000 level seeing short-sellers prevail. Selling calls emerged as the dominant trade of the week, accompanied by a notable decline in implied volatilities (IVs) across all major terms.

While Bitcoin benefits from post-halving sentiment support, other coins are experiencing a short-term bear market. Additionally, ETF inflows have recently slowed down as the market assimilates the premiums from ETFs.

BTC ETFs Flows Subside

The overall inflows in the Bitcoin ETF market have subsided this week with net inflows staying around $100 million per day. Moreover, the GBTC outflows have also dropped to their monthly lows, while the inflows in BlackRock’s IBIT and Fidelity’s FBTC have been on a decline. On Thursday, the total Bitcoin ETF inflows stood at $106 million with BlackRock’s IBIT seeing $144 million inflows and GBTC recording $79 million in outflows.

However, it turns out that the inflows into spot Bitcoin ETFs over the past two months have significantly helped the BTC price rally to $73,500.

Bloomberg ETF strategist Eric Balchunas shares an interesting observation that the majority of Bitcoin’s 40% gains since the ETF launch have been observed after trading hours, leading to substantial price gaps between closing and opening prices. He highlights a noteworthy chart demonstrating the disparity between intra-day and after-hours returns for $IBIT.

The vast majority of the 40% gains in bitcoin since ETF launch have been after hours with huge price gaps forming bt close and open.. great chart showing the intra-day vs after hours return for $IBIT from @psarofagis pic.twitter.com/3EVbyRpzra

— Eric Balchunas (@EricBalchunas) April 4, 2024