As the cryptocurrency industry is constantly facing a downturn, several analysts have started to come up with their own speculations about their future performance.
While many cryptocurrency analysts are still speculating about downturns for crypto in the future, some are predicting huge volatility.
Speculations by Vetle Lunde
According to Vetle Lunde, the cryptocurrency industry is currently experiencing less volatility but the situation may change in the future.
Vetle Lunde, a senior analyst at Arcane Research has predicted that in the short- or mid-term, the crypto industry’s volatility is going to increase tremendously.
Lunde sounded very confident in claiming that very soon, the cryptocurrency universe would witness an “explosive volatility”. The buildup for the huge volatility is the downtrend being experienced as of now.
The recent volatility and the massive leverage in the cryptocurrency industry at the moment would help trigger the massive volatility.
Lunde pointed out that the leverage in the cryptocurrency market has been forming a parabolic path. The path is being formed even when Bitcoin is hovering around a trading price of $19,000.
It has been multiple weeks since the price of Bitcoin has been hovering in the particular range.
Perpetual Contracts’ Parabolic Growth
Lunde went on to claim that the Bitcoin perpetual contracts’ national open interest (OI) is almost close to 500,000 BTC. The perpetual contracts have reached this level as of October 11.
Due to the above, Bitcoin has continued witnessing parabolic growth in terms of its leverage, despite the volatility that is flattening.
Although Lunde predicted a major volatility event in the near future for cryptocurrencies, he did not provide exact figures. He refrained from predicting the market moves in terms of numbers.
Sophisticated Traders are to Benefit
The Arcane Research analyst also claimed that a particular type of trader would benefit the most from the upcoming volatility.
He stated that the investors who are highly sophisticated and have been very careful in monitoring the market would benefit tremendously.
They have been watching the cryptocurrency market situation and are well aware of the straddle strategy. The particular strategy refers to simultaneously buying a call option and a put option in a simultaneous attempt.
Both the call option and the put option are purchased with the same expiration date and at the same price.
MicroStrategy to Contribute to Volatility
It is worth noting that many investors have plans of purchasing Bitcoin in the month of November. One of the major investors in Bitcoin is MicroStrategy, which currently holds the largest number of Bitcoin.
As it buys Bitcoin in November, it may help trigger a trend that would help improve the trading price of BTC as well as other cryptocurrencies.