Cautious Whales Drive Bitcoin Options to $500m Surge
The trading volume of Bitcoin put options conducted through block trades has exceeded $500 million.
Block trades are large transactions that are typically executed outside of the open market in order to avoid directly affecting the market price. A put option grants the holder the right, but not the obligation, to sell an asset at a specified price (known as the strike price) within a certain timeframe.
According to Greeks.live, the majority of the trading activity was centered around two strategies. The first strategy involved a bear spread, which is commonly employed when an investor anticipates a decline in the market but wants to limit potential losses.
In this particular case, the bear spread strategy entailed purchasing put options at a higher strike price of $55,000 and simultaneously selling put options at a lower strike price of $50,000, with both options having the same expiration date.
Additionally, the second strategy involved investors placing orders to close their put option positions if the price of Bitcoin dropped below $45,000. This protective measure was taken to minimize losses in the event of a market downturn.
These two strategies indicate that prominent Bitcoin investors, known as spot whales, are increasingly opting for protective puts. By adjusting their positions in anticipation of market movements, these spot whales, who hold substantial amounts of Bitcoin, are seeking to safeguard their investments against significant losses.
Furthermore, these trading strategies suggest that Bitcoin whales are aware of the possibility of a potential correction, despite the prevailing bullish sentiment. Earlier this week, Daniel Yan, co-founder of Matrixport, predicted a potential 15% correction by the end of April.
Conversely, in the futures market, options traders are increasingly placing bets on Bitcoin reaching its previous all-time high in the near future. However, it is important for investors and analysts to not analyze these options trades in isolation, but rather consider them as part of a broader investment strategy that includes spot holdings.
