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$2.52B in bearish Bitcoin options signal pro traders are hedging their bets

$2.52B in bearish Bitcoin options signal pro traders are hedging their bets

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Bitcoin (BTC) has been trying to break through $60,000 resistance for 23 days. In general, investors don’t seem too worried about this, seeing it as a healthy consolidation phase, and even a recent analysis from JPMorgan Chase estimates that BTC will reach $130,000.

While most investors expect bitcoin to rise above $100,000, derivatives data shows extremely bearish options of $2.52 billion in the $40,000 to $50,000 range?

Currently, there are many signs that the cryptocurrency market is overheating. There is an 11% premium to the price of BTC in the South Korean markets, and this week Cointelegraph reported that there were 100 cryptocurrencies with a market cap of $1 billion.

By comparison : Two months ago, that number was 51. The total capitalization of the altcoin market has grown from $450 billion to $800 billion in 60 days. Therefore, buying protective puts makes sense, especially during these periods of relatively low volatility.

30-day historical bitcoin volatility. Source: TradingView

$2.52B in bearish Bitcoin options signal pro traders are hedging their bets

Although the historical average volatility is 60%, this is the lowest in four months. To get an idea of how big this number is, look at the historical volatility of the iShares – Expanded Programmatic and Technology ETF (IGV), which currently stands at 42%, its highest level in 11 months.

The high volatility of bitcoin means that options trade at a very high premium, making buying downside protection quite expensive. For example, a $44,000 put option expires on the 30th. April is currently trading at 0.007 BTC, which is equivalent to $411 with a current price of $58,800.

Bitcoin options combine open interest. Source: Bybt

$2.52B in bearish Bitcoin options signal pro traders are hedging their bets

The total open interest of $40,000 to $52,000 of put options amounts to 42,800 BTC contracts. This equates to $2.52 billion at the current price of $58,800. There are several expiration dates involved, but to put it in perspective, those 42,800 puts would expire on the 28th. Mai is worth $56.4 million today.

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The put-call ratio is balanced between $50,000 and $66,000

The data shows that some wealthy bettors are betting on ultra low BTC options, but mainly as a defense against downside opportunities given the overheated state of the market. Traders should also consider bullish calls between $80,000 and $100,000.

The ultra-bright calls represent a total of 24,500 BTC contracts, accounting for $1.44 billion in open interest. If they’re after the 28th. May, they would be worth $30.4 million today.

Although looking at the extremes may paint a bearish picture, traders should keep in mind that calls and puts are balanced in the $50,000 to $66,000 range. As a result, there is currently little incentive for price movement in either options market.

Buying unexpected downside protection puts or ultra-fast calls does not necessarily mean investors are betting on these wild price movements. Hedging a portfolio allows a trader to further expand their positions with less risk due to high volatility.

The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research before making a decision.

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