Bitcoin registered brand volatility may be entering a new phase thanks to the stock exchange and values commission (SECOND).
The agency’s decision to increase position limits in options for most Bitcoin ETFs could help soften pricing changes by encouraging strategies such as the sale of calls, which limits the rise in exchange for stable income, according to Nydig Research.
This increase in the position limits for the options of options in Ibit occurred when the regulator approved the reimbursements in kind for the Bitcoin Spot ETFs.
By allowing merchants to have ten times more contracts than before, Nydig wrote, the SEC has opened the door to an activity of more aggressive and sustained options. Covered call strategies, in particular, work better at scale.
They are designed to obtain the performance of existing holdings selling wire exposure, which can naturally suppress the price movement if done in large wallets.
Bitcoin’s volatility has already been in Declive, with the BTC Volatility Index (DVOL) of Dribit that shows a constant decrease of around 90 to 38 in the last four years.
Even so, it stands out compared to bonds, actions and other traditional assets. That makes it a tempting objective for investors trying to raise income from changes in the market, effectively harvesting volatility, but also risky for institutions that require stable exhibitions.
“As volatility decreases, the asset becomes more invertible to institutional portfolios seeking balanced risk exposure. This dynamic could reinforce punctual demand,” Nydig analysts wrote.
Ray Dalio, one of the first champions of such risk parity strategies, recently suggested an assignment of 15% to gold and cryptography amid increasing debt levels.
“The feedback cycle of the fall of volatility that leads to a greater purchase of spots could become a powerful promoter of sustained demand,” the firm concluded.
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