Bitcoin’s volatility is flashing early signs of a major breakout, with traders positioning for a sharp move higher amid mounting expectations of a US Federal Reserve rate cut later this month, according to Dr Sean Dawson, Head of Research at leading on-chain options platform Derive.xyz.
“Implied volatilities across 14-, 30- and 90-day expiries have surged to their highest levels in the past 30 days. That’s a clear signal that markets are bracing for bigger swings ahead,” Dawson said.
The spike in volatility comes as Polymarket odds price a 90% probability of a 25-basis-point Fed rate cut, fuelling optimism across risk assets.
After sliding 3% from US$123,000 to US$120,000, Bitcoin has since rebounded to around US$121,600. Dawson noted that on-chain data from Coinglass shows a dense cluster of short positions just above current levels.
“A modest upward move could trigger a wave of liquidations, propelling Bitcoin toward US$125,000 and potentially beyond,” he said.
Institutional demand remains firm, with ETF inflows continuing to support market stability. “Bitcoin ETF inflows have stayed solid throughout the past week, while Ethereum has mirrored this trend,” Dawson added. “That points to a broadly bullish macro backdrop heading into October.”
Dawson shared that Ethereum is also attracting strong bullish sentiment, with call open interest concentrated at US$5,000 and US$6,000 strikes — signalling optimism for a broad-based “Uptober” rally across the major digital assets.
“The combination of sustained institutional inflows, elevated implied volatility and aggressive call positioning reflects mounting conviction that crypto markets are entering the next major leg higher,” Dawson said.
As of Oct 12 at 11:55am (GMT+8), Bitcoin was trading near US$110,843, down sharply after recent macro shocks, while Ethereum hovered around US$3,785.
