Your favorite crypto news blog

Traders Bet Bitcoin Price Won’t Explode Anytime Soon — Expect A Boring Summer

Bitcoin 2021/07/16 17:23 by Ruholamin Haqshanas
Traders Bet Bitcoin Price Won't Explode Anytime Soon — Expect a Boring Summer

For the last 20 days, Bitcoin price has been see-sawing amongst key resistance and support levels, $36k and $31k, respectively. Considering this, it would be fair to expect the Bitcoin trading volume to diminish. However, certain traders are busy as usual, betting on Bitcoin’s uneventful pattern, essentially hoping prices do not break out in the short term.

This image has an empty alt attribute; its file name is QmHSugKm.pngBTCUSD Chart By TradingView

When it seems to be a boring summer, options traders have figured out a strategy to reverse this unexciting situation. Some options traders are placing “short strangles” — basically a bet that Bitcoin will continue to see-saw in the range it is currently trapped in.

A short strangle is a strategy in options that requires the investor to place one short call and one short put, with the short call having a higher strike price compared to the short put. Also, the investors should settle an identical expiration date and underlying asset on the calls — in this case, Bitcoin. Thus, if the asset price remains between the strike prices, the options will expire worthlessly and the investor will keep whatever premium it got for the options.

QCP Capital, a Singapore-based trading firm, asserted that they are using the “short strangles” strategy to benefit the current state of affairs. “Our favorite trade continues to be short BTC strangles within the $30,000 to $40,000 range. With psychological resistance at $40,000 and strong support at $30,000, there’s a good chance that BTC trades in this $10,000 range in the near future, which would likely cause implied volatility to collapse,” the firm said in a Telegram post.

While stating that the lack of momentum in the Bitcoin market has amplified their conviction, the firm declared their intentions to continue using this strategy up until August. “Right now, our trading plan follows the 2018 BTC analog where we expect a dampened trading environment from here to August (short volatility), followed by a rally,” QCP Capital said.

Pankaj Balani, CEO of Delta Exchange, affirmed that most traders are presently using this strategy. “It’s the most popular trade right now. For July, open interest remains highest for $30,000 strike puts, and $40,000 strike calls as traders write this range to collect the premiums,” he stated.

However, it is good to point out that this type of trade is quite risky while offering a very limited profit. If the market breaks out in any direction, either up or down, the investor would endure amplified losses.

0 Like(s)

You should also read...

Bitcoin 04/12/19 22:00 by Cole Petersen
Bitcoin: Extreme Fear Amongst Investors May Signal That a Trend Shift is Imminent
Bitcoin (BTC) has been firmly caught within the throes of immense volatility over the past several days and weeks, with its recent bout of sideways trading ultimately resulting in a massive movement t...
Read More
Crypto 30/04/20 03:00 by Cole Petersen
Binance Sees Record High Trading Volume as Investors Flood into Crypto
The crypto market has been able to add on over $20 billion to its total capitalization, with the upswing seen today by Bitcoin and many of its smaller counterparts marking a full erasure of the losses...
Read More
Bitcoin 17/06/20 22:11 by PR DESK
Disappointed by Bitcoin “Bull”? You Can Still Profit on Crypto Market With Bexplus
In the Autumn of 2017, the price of bitcoin began to rise and in December, it reached nearly $20,000. Since then, the bitcoin market has attracted more and more new traders, “hodlers” in particul...
Read More
Bitcoin 29/07/20 04:00 by Cole Petersen
Deribit Options Market Sees Record High Volume as Bitcoin Upside Demand Grows
The structure of the entire cryptocurrency market has been shifting throughout 2020, with traders placing an increased emphasis on options contracts to capitalize on the volatility seen by Bitcoin and...
Read More
Bitcoin 28/01/21 14:00 by Yashu Gola
Calls for Bitcoin Breakdown Grows amid Global De-Risking Sentiment
Bitcoin prices jumped during the European trading session on Monday even though traders assessed the potential of its massive declines against a stronger US dollar. The flagship cryptocurrency topped ...
Read More