The U.S. Securities and Exchange Commission’s (SEC) clampdown on leading cryptocurrency exchanges Binance and Coinbase failed to spur signs of concern among bitcoin traders

The U.S. Securities and Exchange Commission’s (SEC) clampdown on leading cryptocurrency exchanges Binance and Coinbase failed to spur signs of concern among bitcoin traders, according to options-based implied volatility metrics. That is an indication the lawsuits were anticipated and priced in.

The biggest takeaway for me is everybody has been looking for an impetus to shock implied volatility back to life and see some type of renewed bid for longer-dated options, stated Christopher Newhouse, an independent crypto derivatives trader. But I see little proof of that, which indicates players in the volatility market might be shrugging this off.

Regulatory concerns have been widespread from the beginning of the year, and possibly the market anticipated and priced in the Securities and Exchange Commission’s actions, Newhouse added.

Implied volatility (IV) is based on options data and indicates investors’ expectations for price turmoil over a certain duration. It is positively impacted by demand for options, which are derivative contracts that provide the buyer safeguard against bullish or bearish variations. A call option safeguards against rallies, while a put option safeguards against declines.

Growing demand for options and the ensuing rise in implied volatility often indicates more caution in the market and the probability for more price turmoil in either direction. Until now, bitcoin implied volatility has seen a muted increase at best.

Bitcoin’s seven-day annualized implied volatility increased to 43 per cent from 34 per cent after the Securities and Exchange Commission news, and has since retreated to 40 per cent, a modest six-point rise for the week. The 30-day gauge has risen by four points from multimonth lows, while the three and six-month IVs have stayed mostly unaffected, as per Amberdata.

We have seen a brief rise in the front-end (short duration) implied volatility. Therefore, there are no actual indications of panic, David Brickell, director of institutional sales at Paradigm, told CoinDesk.

The possible cause is that bitcoin and ether have already been certified by the U.S. CFTC, and their derivatives have been traded on compliant exchanges like CME for a number of years, while the Securities and Exchange Commission’s prosecution mostly targets altcoins, and many altcoins identified as securities, the effect on bitcoin and ether is comparatively restricted, Ardern added.

The Securities and Exchange Commission, in its lawsuit against Coinbase, cited Solana, Cardano, Polygon, Filecoin, Sandbox, Axie Infinity, Chiliz, Internet Computer, Voyager Token, NEAR protocol, NEXO, FLOW and DASH, driving their prices down.