As we approach the weekend, traders may want to reconsider their plans to detach from trading screens. Analysis from the digital assets trading firm STS Digital suggests that the upcoming White House crypto summit on Friday could be a catalyst for significant market activity.
U.S. President Donald Trump is set to host key industry players, including representatives from Coinbase, Chainlink, and Exodus. This summit comes on the heels of Trump’s commitment to establishing a strategic crypto reserve before the November election.
Current rumors indicate that Trump may unveil a plan for a strategic bitcoin (BTC) reserve during this meeting, potentially moving away from earlier suggestions regarding a diverse basket of altcoins, which included cryptocurrencies like XRP, Cardano’s ADA, and Solana (SOL), alongside BTC and ether (ETH).
Market indicators related to BTC, ETH, and SOL options on Deribit reveal that traders are bracing for a volatile weekend in the wake of the summit. According to Jeff Anderson, head of Asia at STS Digital, the pricing dynamics suggest a significant divergence in implied volatility between Friday and Saturday, highlighting market apprehension.
“Options markets are showing the nerves (and illiquidity) going into the weekend and the raft of potentials. The Friday vs Saturday implied volatility spread is nearly 25 vols wide across the board with Friday expiries missing the expected variance,” Anderson remarked during an interview with CoinDesk.
Implied volatility, an essential metric in options trading, reflects the anticipated price fluctuations of an asset over a set period. The figures for bitcoin options indicate an annualized implied volatility of 56% for Friday expirations, escalating to 80% for those expiring on Saturday. This notable 24-point gap underscores trader expectations for potential price turbulence post-summit.
A similar trend is observed with ether and solana options, indicating widespread market apprehension. The forward volatility calculation for BTC suggests an expected price movement of approximately 5.5% between Friday at 08:00 UTC and Saturday at 08:00 UTC, with potential swings in BTC pricing reaching nearly $5,000 following the summit announcement.
Anderson cautioned, however, that expectations for large volatility often lead to disappointment in the crypto space. “Quite often, large expected volatility like this ends up being a letdown as expectations can exceed reality. Nevertheless, the breakevens do not seem overly large, and options are generally considered a safer strategy for taking directional views in this market environment,” he said.
Looking ahead, Anderson expects option prices with longer maturities to decrease after the event as market fears ease and volatility subsides.
Traders and investors may want to stay alert this weekend, especially with the potential implications emanating from the White House summit. Given the unpredictable nature of cryptocurrency markets, the next few days could prove crucial in shaping market dynamics.
