Bitcoin’s volatility not scaring off traders, level of buying increases

By Puja Sharma

Traders are perhaps setting up options positions in Bitcoin that would benefit from price swings ahead of the Federal Reserve’s rate decision, as implied volatility is rising ahead of the announcement. Investors’ expectations of turbulence over the next four weeks have increased from 68% to 77% this month.

Research from GNY, the leading blockchain-based machine learning business, reveals that 83% of traders who trade at least $1,000 a month in Bitcoin, believe their level of trading in the cryptocurrency increased in 2021 when compared to 2020, and a key reason for this was price volatility.

GNY launched BTC Range Report, providing some of the most accurate forecasts around Bitcoin volatility of any platform or service available today.  Extensive testing of the BTC Range Report has delivered a mean absolute percentage error (MAPE) of between 3% and 7% making it one of the most powerful BTC prediction tools in the market. The average of the majority of competitor BTC prediction tools tested by GNY was 10%, but it was as high as 17% for some platforms.

GNY is building transformative new technology at the intersection of machine learning and blockchain. “Our Level 1 blockchain solution is constructed with machine learning requirements built into our core code and data structures, which provides developers that use our platform to create apps a huge advantage,” said Cosmas Wong, GNY’s CEO.

Just over one in three (37%) said they sold more Bitcoin in 2021 when the price became more volatile, and 43% said they bought more when this happened. Only 20% said their level of trading did not change when volatility increased.

Throughout 2021, 25% of serious Bitcoin traders said the value of their trades in the cryptocurrency increased by between $1,000 and $5,000 in 2020, and 23% said it was between $5,000 and $10,000 more.  Some 24% said it was higher than this.

Wong added: “2021 was a busy year for trading Bitcoin and other cryptocurrencies, and high levels of volatility were a key driver of this. Last year saw Bitcoin reach a high of $68,790, and a low of $28,894, and many traders see these huge swings in valuation as an opportunity to trade more.”

Key highlights

• 43% of serious Bitcoin traders increased their level of buying during periods of volatility, compared to 37% who sold more
• Traders this year are setting up options positions in Bitcoin that would benefit from price swings ahead of the Federal Reserve’s rate decision.