Bitcoin Volatility Set to Drop Further, Option Selling Gains Traction

In Brief:

Matrixport anticipates further declines in Bitcoin volatility, suggesting that option selling could become a profitable strategy for investors.

The launch of a Bitcoin spot ETF is expected to contribute to decreased volatility, enhancing the potential for option sellers to earn additional premiums.

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Matrixport: Bitcoin Volatility is Expected to Decrease Further, and Option Selling May Become an Effective Profit Strategy

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Matrixport has released a chart strategy indicating that Bitcoin's volatility is likely to decrease further, providing an opportunity for option sellers to profit. According to the report, Bitcoin's volatility is expected to remain within a +/-20% range in any 30-day rolling cycle, reducing the likelihood of sharp price rebounds or declines. This stability offers option sellers the chance to earn additional premiums, thereby boosting Bitcoin's yield.

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The strategy has experienced only minor temporary losses during brief periods at the end of the third quarter of 2023 and the first quarter of 2024. With the anticipated launch of a Bitcoin spot ETF, volatility is projected to decrease even further, making option selling an increasingly effective profit strategy in the coming months.

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Market Implications and Strategy Benefits

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Matrixport's analysis suggests that the reduced volatility environment will benefit option sellers, allowing them to capitalize on stable price movements. The introduction of the Bitcoin spot ETF is expected to play a significant role in calming market fluctuations, enhancing the appeal of option selling as a viable investment approach.

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As investors seek to optimize their returns in a less volatile market, option selling could emerge as a preferred strategy, offering the potential for consistent profit generation.

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