Bitcoin’s volatility is expected to surge this weekend, according to recent data on options trading. The implied volatility for BTC options expiring on October 5 is significantly higher compared to options expiring on October 25, indicating a potentially turbulent weekend ahead.
The so-called implied volatility “kink” in the term structure suggests that traders are bracing for significant price swings post Friday’s Nonfarm Payrolls (NFP) data release and potential retaliatory strikes by Israel. This shift in volatility comes after a period of relatively quiet weekends during the ongoing bitcoin bull run that started in October last year.
The upcoming NFP data release on Friday is expected to show that the economy added 140,000 jobs in September, with the jobless rate holding steady at 4.2%. However, there are risks of a hawkish repricing of Fed rate cuts in November and December, which could strengthen the dollar and impact risk assets like BTC.
Furthermore, escalating tensions in the Middle East, particularly between Iran and Israel, have heightened the risk of a full-blown conflict. Iran’s recent missile attacks on Israel have led to increased risk aversion in the markets, causing BTC to drop over 4%. Investors are now closely monitoring Israel’s potential retaliation against Iran, which could further impact crude prices and the dollar index.
The combination of the NFP data release, geopolitical tensions in the Middle East, and the expiration of BTC options this weekend is expected to create an unusually volatile trading environment. Traders are preparing for potential price fluctuations and expressing their views in both traditional and crypto markets.
Overall, the upcoming weekend is poised to be a critical period for bitcoin and the broader cryptocurrency market. Investors and traders will need to navigate through these uncertain times and stay updated on the latest developments to make informed decisions in this rapidly changing landscape.