Summary:
- Options traders were caught off guard by a 43% surge in Bitcoin’s value from March 10 to March 20.
- Only 14% of the $1.12 billion open interest set to expire was placed at $28,000 or above.
- The result favored the bears by $60 million, as traders who placed bearish bets made a profit.
Options Traders Off Guard by Bitcoin Surge
Options traders have been taken aback by Bitcoin’s recent surge in March. At the time of writing, technicals indicate increased selling pressure in the crypto market. The Fear and Greed Index shows a high level of greed in the market. Bitcoin’s value has experienced an astonishing 43% surge between March 10 and March 20, catching options traders off guard. Analysts attribute this spike in value partly to increased demand for commodities, as investors perceive risks in central banks‘ emergency funding programs. As liquidity injection increases, fears of inflationary pressure become more pronounced, with evidence suggesting that investors are hedging their bets accordingly.
Bulls Concentrated Bets Above $29K
Only 14% of the $1.12 billion open interest set to expire on April 7 was placed at $28,000 or above. Bitcoin enthusiasts who were betting big on the cryptocurrency may have missed out on a lucrative opportunity to reap the rewards of increased demand for inflation protection. While Bitcoin bulls may have initially benefited from this surge in demand, some may have squandered their chances by placing excessively large bets on higher prices.
Bears Profit $60M as BTC Trades Between $27-28K
According to reports, the weekly BTC options expiry has a whopping $1.2 billion in open interest. However, it is important to note that this figure may not be entirely accurate, as bullish investors have focused their bets on Bitcoin’s price trading above $29,000. The 1.85 call-to-put ratio reflects the disparity in open interest between the $720 million call (buy) options and the $390 million put (sell) options. However, the outcome will be much lower since the bulls were overly optimistic.
As of April 7 at 8:00 am UTC, Bitcoin’s price remained at $27,800, resulting in a decrease in available call options for purchase to just under 125 million dollars worth . This is because those with rights to buy Bitcoin at either 29k or 30k saw those rights voided when BTC traded below that price point on expiry day.
The net result favored bears as there were 1 200 calls versus 3 500 put between 27 000 and 28 000 dollars respectively; meaning those who bet bearishly made 60 million dollars profit when BTC stayed within that range come expiry time.
Technicals Show Increasing Selling Pressure In Crypto Market
According to Santiment ,a blockchain analytics firm ,the current macroeconomic environment is indicative of increasing selling pressure .They report that despite bullish sentiment ,BTC remains far from its all time high .Altcoins such as Ethereum are also experiencing declining volumes and losses across exchanges .This suggests weakening buying power as many coins struggle against volatile conditions.
Conclusion
Investors should remain aware of potential risks associated with investing into cryptocurrencies like bitcoin – especially during times like these where prices can fluctuate rapidly due to external forces such as macroeconomics or government intervention .It is important to do your own research before investing into any asset class – regardless whether they are traditional or digital assets -to ensure you make informed decisions regarding your investments