• Bitcoin’s value has surged 43% 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 hedge their bets against inflationary pressure.
• The net result of the $1.2 billion open interest set to expire on April 7 favored the bears by $60 million, as there were 1,200 calls versus 3,500 put between $27,000 and $28,000.
Bitcoin’s Surge Caught Options Traders Off Guard
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 and 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 After Open Interest Expiry
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 set to expire on April 7th 2021 at 8am UTC . However, as BTC remained at 27800 USD at expiry time ,the net result favored the bears by 60 Million USD ,as there were 1200 calls versus 3500 puts between 27000 – 28000 USD . This meant that traders who placed bearish bets made a profit of 60 Million USD .
Fear & Greed Index Signals Market Greed
The Fear and Greed Index shows a high level of greed in the market currently with evidence suggesting that investors are hedging their bets accordingly due to increasing liquidity injection which can lead to inflationary pressure . Investors perception about these risks has resulted into increase in commodity demands hence fueling bitcoin’s recent surge in March 2021 .
Conclusion
Options traders were caught off guard by Bitcoin’s recent surge in march resulting into profitable opportunities for those who betted wisely while others missed out due to excessive bullishness . The net outcomeof this week’s expiry favored bears with a hefty sum of 60 Million USD while technical analysis points towards increasing selling pressure among crypto markets currently .