Bitcoin Could Explode: Bitwise Alpha Strategist Predicts "Unbelievable" Volatility

Jeff Park, Head of Strategy at Bitwise Alpha, took to X to express his belief that the SEC's approval of BlackRock's Bitcoin spot ETF options trading will trigger a "massive" surge in Bitcoin's price.

Park argues that this event will lead to "unbelievable" volatility in the market, a phenomenon that requires further explanation. This volatility stems from a combination of Bitcoin's unique characteristics, the nature of the regulated options market, and the powerful synergy between the two.

According to Park, the approval of Bitcoin spot ETF options trading marks the most significant step forward for the cryptocurrency market. For the first time, Bitcoin's nominal value will be "partially banked" through ETF options. While Bitcoin's limited non-custodial supply is its greatest strength, it also limits the creation of synthetic leverage. Now, Bitcoin will have access to a regulated market, where the US Commodity Futures Trading Commission will protect clearing members from counterparty risks. This signifies a potential exponential growth in Bitcoin's synthetic nominal exposure.

Furthermore, Bitcoin possesses a unique volatility trait - as the spot price rises, volatility increases, causing delta to rise at a faster rate. When traders short gamma (the situation with Bitcoin during gamma squeezes becomes explosively recursive). Short sellers are forced to buy back at higher prices, driving further buying and further price increases. This negative vanna gamma squeeze can propel Bitcoin prices upwards like a rocket.

In essence, the Bitcoin ETF options market presents the first instance in the financial world of regulated leverage being applied to a truly supply-constrained, permanent commodity. Things could get wild, even to the point where the regulated market might be forced to shut down. But the remarkable aspect of Bitcoin is the constant presence of a parallel, decentralized market that cannot be shut down, unlike stocks.