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Analysts' Insights

Analysts' Insights

Bitcoin's Captive Dance Between 26-30k 💥

👇 1) The Bitcoin options book indicates heavy selling of upside calls. This will likely keep Bitcoin prices capped at sub-30,000 for the next few weeks. The sizeable big-level strikes of 30k, 35k, and 40k are towering over any upside rally attempt for spot prices.

👇 2) The gamma exposure between the current 26,500 spot level and 30,000 is insignificant, and therefore, the heavy lifting would need to be done by a rally in spot prices. This seems unlikely currently. Perp futures are also trading already at a premium; a short squeeze seems unlikely too.

👇 3) Therefore, we would keep selling 30k upside calls as vol will likely compress more over the summer after the small move higher this week. Realized vol has increased from 30% to 41% and will likely fall back quickly to sub-30%.

👇 4) Despite the SEC filing 13 charges against Binance and its founder CZ on June 5, 2023, Bitcoin's implied and realized volatility levels have hardly moved. This is likely because the CFTC charges against Binance on March 27 2023, have already set the precedent and might bring even more significant consequences to the cryptocurrency exchange.

👇 5) An outcome, in one form or another, will likely take 12-24 months and will remain an overhang for the crypto markets for now.

👇 6) One of our key trading strategies for 2023 was to sell Bitcoin calls every time our Greed & Fear Index loses momentum – defined as when the index level crosses below the moving average after printing a level of >90%.

👇 7) This strategy continues to add yield to any long-only BTC strategy and, unless the market runs away, should be superior to any long-only portfolio. Arguably, crypto is not in a new bull market, as there are no real drivers currently.

👇 8) Looking back, all four crypto bull markets had clearly defined themes. A peak in US interest rates or ordinals can hardly be seen as having the power to lift Bitcoin prices 5-10x.

👇 9) In the last 24h, Bitcoin volume has dropped sub-$10bn and Ethereum around $5bn. If those low-volume days persist, implied volatility will resume its downward trend.
👇 10) There is always money to be made in crypto markets; right now, the best strategy appears to sell volatility and lean back for a quiet summer.

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