Bitcoin (BTC) has been trying to overcome the $ 60,000 resistance over the past 23 days. Investors are generally not concerned about this, as they see it as a period of healthy consolidation, and even a recent analysis by JPMorgan Chase indicates that Bitcoin will reach $ 130,000.
Although most investors expect the bitcoin price to exceed $ 100,000, the derivative data shows $ 2.52 billion in very low options in the $ 40,000 to $ 50,000 range.
At the moment, there are several signs that the cryptocurrency market is in an overly high state. There is an 11% increase in the price of BTC in the South Korean market, and this week Cointelegraph reported that there are 100 cryptocurrencies with a market value of $ 1 billion.
By comparison, the number was only 51. The total altcoin market capitalization rose to $ 800 billion from $ 450 billion in 60 days. So it makes sense to buy protective rackets, especially in these periods with relatively low volatility.
While the historical average volatility of 60% is not moderate, it is the lowest in four months. To get an idea of how high the number really is, one can look at the historical volatility of the iShares Expanded Fund, which is traded on the technology exchange program, IGV, which is currently at 42% – an 11-month high.
Bitcoin’s high volatility means that options are traded at a very high premium, which makes protection from purchase losses costly. For example, a put option is currently trading at $ 44,000 as of April 30th at 0.007 BTC, which equates to $ 411 with a current price of $ 58,800.
The total open interest rate between $ 40,000 and $ 52,000 of put options is 42,800 BTC contracts. This equates to $ 2.52 billion at the current price of $ 58,800. Although there are many expiration dates, the 42,800 options offering, which expires on May 28, will cost $ 56.4 million today.
The percentage of buy and sell options ranges between 50 thousand dollars and 66 thousand dollars.
The data shows that some wealthy players are betting on very bearish options on Bitcoin, but primarily as a hedge against the opportunity to fall due to the overheating of the market. Traders should also consider bullish buy options between strikes of between $ 80,000 and $ 100,000.
Ultra Bull Calls are 24,500 contracts on BTC, which equates to $ 1.44 billion in open interest. If purchased before May 28, it would be worth $ 30.4 million today.
While looking at the extremes can paint a bearish picture, traders should remember that calls and bets between $ 50,000 and $ 66,000 are balanced.At the moment, the options markets currently have little incentive to move the price in one direction or another.
Buying pre-emptive options in the event of an unexpected drop or buying very bullish calls does not necessarily mean that investors are betting on these sharp price fluctuations. Hedging a portfolio means that the trader can increase his positions further while reducing the risk of high volatility.