According to CoinDesk: Bitcoin traders are on high alert as speculation mounts that former President Donald Trump may announce a significant role for Bitcoin in the U.S. financial system during his upcoming speech at the Nashville Bitcoin Conference. This has led to increased expectations for extreme price movements in the cryptocurrency market.
Key Developments
Trump's Potential Announcement
Rumours are circulating that Trump will declare Bitcoin a strategic reserve asset, which could trigger a parabolic rise in its price. According to Markus Thielen, founder of 10x Research, such an announcement could be a major catalyst for Bitcoin, pushing its value to new heights.
Options Market Activity
Activity in the options market, specifically on Deribit and tracked by Amberdata, shows a noticeable increase in the "butterfly index." This index measures the volatility of out-of-the-money (OTM) 25-delta call and put options relative to at-the-money (ATM) options. The spike in the index indicates that traders are expecting more extreme market movements.
Market Reactions and Predictions
Greg Magadini, director of derivatives at Amberdata, noted in an email that the derivative markets are pricing in the potential for significant market events, particularly with Trump's upcoming speech. This sentiment is reflected in the increased cost of "butterfly" options, which indicate heightened expectations for volatility.
Additional Factors Influencing the Market
Spot Ether ETFs and FOMC Meeting
The anticipated launch of spot Ether ETFs in the U.S. and the upcoming Federal Open Market Committee (FOMC) meeting on July 31 are also contributing to the rise in the butterfly index. Traders are preparing for potential tail risks, which are unexpected events that could significantly impact the market.
Economic Data Releases
This week, traders will also be closely monitoring advance estimates of the U.S. GDP growth for the June quarter of 2024, the Fed's preferred inflation measure (core PCE prices), durable goods, and retail sales for June. These numbers are expected to influence Federal Reserve rate cut expectations and demand for risk assets, including Bitcoin.
