Bitcoin and Ether: July forecast surges after the fall volatility in June

In a recent report, Sean Dawson, the Director of Research at Derive.xyz, shared analyses of the implied volatility of Bitcoin and Ether in June and provided forecasts on the market outlook for July. According to Dawson, although the crypto market has experienced significant fluctuations in the past, traders are currently positioning for an important breakout this month.

Bitcoin and Ether Market Volatility in June

In June, Bitcoin experienced a sharp decline, dropping below the 100,000 USD mark amid rising military tensions in the Middle East, particularly on June 13 and 22. However, afterward, the price of Bitcoin recovered to 107,000 USD. Ether was also not immune to volatility, as its price fluctuated around 2,600 USD, except for a brief drop to 2,200 USD due to concerns about war.

However, despite concerns about a nuclear conflict and the possibility of the outbreak of World War III, the market quickly stabilized as nations reached a ceasefire agreement. This stability has helped alleviate investor concerns and created a relatively calm trading environment for the remainder of the month.

The implied volatility over 30 days for both Bitcoin and Ether has seen a significant decrease in June. Specifically, the implied volatility index for Bitcoin (BTC IV) dropped from 44% to 36%, while the index for Ether (ETH IV) fell from 68% to 60%. This data indicates that traders have bet on a slight correction, as major price drops occurred during times of escalating tensions in the Middle East. According to Dawson, the relatively quiet market response during these times suggests that traders correctly anticipated that hostile actions would not escalate further.

Implied volatility of Bitcoin 30 days | Source: The Block## Market outlook for July

Looking ahead, the Derive.xyz options exchange sees upside potential for Bitcoin and Ether in July, which could extend through the end of Q3. Traders on this platform are preparing for a strong price rally, with Bitcoin expected to reach 130,000 USD by the end of August. However, current investor interest is mainly focused on options contracts with target prices ranging from 130,000 to 135,000 USD, while there are also short positions at levels from 85,000 to 90,000 USD, reflecting expectations for either a price breakout or a tighter move from the Federal Reserve (Fed).

In addition, the recent employment report has shown that the unemployment rate has decreased to 4.1%, surpassing the forecast of 4.3% and the 4.2% level from June. This has raised expectations that the Fed will continue to keep interest rates unchanged in the near term, rather than cutting them as some analysts had previously expected. According to Valentin Fournier, the chief research analyst at BRN, the strong labor data has reduced the urgency for a rate cut, which could impact the value of Bitcoin in July.

Implied volatility of ETH | Source: The BlockOne particularly noteworthy factor is the divergence of Ether in recent months. According to data from Derive.xyz, nearly 80% of open contracts in July for Ether are currently above the 3,000 USD level, and about 30% of target contracts even exceed the 3,500 USD level. Dawson commented that the plan to release tokenized stocks and the launch of Layer 2 on Arbitrum by Robinhood could be the driving factor for a breakout for Ether in July. While the Bitcoin market is preparing for a major move, the Ether market has a stronger momentum story, leading many traders to expect a significant breakout.

In summary, July may be a significant time for the cryptocurrency options market, with positive signs for both Bitcoin and Ether. Although there is a disparity in outlook between these two coins, it cannot be denied that traders are preparing for major changes, from fluctuations in Fed policy to important geopolitical developments. In this context, investors need to closely monitor macroeconomic data while also being ready to react to major market movements.

Emma