Bitcoin Option Selling Likely Before Quarter End, BTC Price Rejected At $72,000
Highlights
- Despite net inflows, the BTC price reaction appears disrupted.
- Bitcoin volatility curve remains very steep suggesting strong options selling ahead.
- Bitcoin can see 2016-like correction if its fails to make new all-time highs.
The world’s largest cryptocurrency Bitcoin (BTC) registered a spike all the way to $72,000 on Wednesday, however, couldn’t sustain the momentum facing immediate selling pressure. As of press time, the Bitcoin price is trading at $69,640 with a market cap of $1.37 trillion.
Bitcoin (BTC) Price Sees Selling Pressure
In recent trading sessions, Bitcoin (BTC) surged to highs near 71.8k during the US market open, only to face a sharp rejection thereafter, according to insights from QCP Capital. Subsequently, BTC dipped below 68.4k, while Ethereum (ETH) touched lows of 3,458, forming an eveningstar-like pattern over the past three days on both charts.
Despite expectations of a net inflow day for spot Bitcoin ETF, the market’s price-reaction function appears disrupted, leaving uncertainties regarding the potential for a significant rally following a positive number. Furthermore, BTC’s realized volatility is trading approximately 10% below implied volatility levels, prompting speculation among traders. This discrepancy may stem from traders adopting a cautious stance to observe the first-ever quarter-end rebalancing on spot ETFs.
BTC Options Selling Strategy
In light of quarter-end dynamics, QCP Capital suggests a strategy of option selling, particularly as the volatility curve remains highly steep. The desk observes significant selling of options during this period, prompting consideration of selling back-end volatilities.
Furthermore, with forwards maintaining elevated levels, QCP Capital recommends selling the Spot-Forward Basis and rolling short calls further out as an attractive option strategy. These insights come as market participants navigate quarter-end movements and seek to optimize their trading strategies amidst evolving market conditions.
Popular Bitcoin analyst Rekt Capital explains that despite the current upside in the Bitcoin price over the last week, analysts continue to remain cautious. Rekt capital raised concerns over the possibility of a breakdown to lower prices reminiscent of the 2016 market pattern if Bitcoin fails to establish new highs. Analysts emphasize the significance of the pre-halving retrace bottom and speculate that the bottom of the re-accumulation range may hover around this level.
Bitcoin successfully held the highs and even reversed to the upside to revisit the old All Time Highs of ~$69200
However, the principle remains the same
If Bitcoin can't break clear to new highs, there is a possibility that price could breakdown to lower prices again in… https://t.co/G69vAAvRMK pic.twitter.com/ff6ft5DI8v
— Rekt Capital (@rektcapital) March 27, 2024
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