Derivatives traders are expecting "unprecedented" volatility in the bitcoin market, according to Bitfinex analysts.

As the industry anxiously awaits news from the Securities and Exchange Commission about applications for more than a dozen proposed spot bitcoin ETFs, the analysts told The Block that signals from the options market suggest volatility expectations among derivatives traders are currently higher than those observed throughout all of 2023.

"Traders are bracing for the possibility of unprecedented price moves in bitcoin, according to signals from options markets," the Bitfinex analysts said.

The anticipation comes amid record options trading volumes in December and ahead of possible approval of the spot bitcoin ETFs from U.S. financial regulators.

Bitcoin implied volatility spikes

According to The Block's Data Dashboard, current at-the-money implied volatility for bitcoin soared to a multi-month high of 70.1% on Tuesday.

The Bitfinex analysts drew attention to this spike in short-term options implied volatility, saying that it suggested "traders are bracing for more volatility ahead as they anticipate a decision from the SEC on bitcoin ETFs." According to Bitfinex, implied volatility has hit current highs above the historical average volatility of 41.1%.

According to The Block's Price Page, the largest digital asset by market capitalization was changing hands for $44,114 at 1:55 p.m. ET. That's an increase of over 4% in the past 24 hours.