What Are Savvy Bitcoin and Ether Traders Preparing for as Summer Approaches?
Savvy Bitcoin (BTC) and Ether (ETH) traders are employing defensive strategies amidst a market anticipating bullish summer price action. This is evident in the 25-delta risk reversal options strategy, which involves simultaneously buying a put option and selling a call, or vice versa. Current Deribit options data, analyzed by Amberdata, reveals a preference for downside protection. For BTC, negative 25-delta risk reversals across June, July, and August indicate a stronger demand for put options (offering downside protection) than call options (bullish bets). Similarly, ETH shows a higher price for put options leading up to the July expiry.
This hedging activity is driven by long holders in the spot and futures markets seeking protection against potential price drops. QCP Capital, in a recent market note, highlights the consistent preference for downside protection in both BTC and ETH across June and September, indicating active hedging against potential drawdowns. Further evidence of this cautious approach is seen on Paradigm’s OTC platform, where recent top BTC trades included a put spread and a bearish risk reversal. In the ETH market, a long position in the $2,450 put was coupled with a short strangle (volatility) trade.
Bitcoin’s price has remained relatively stagnant above $26,000 for over 40 days, according to CoinDesk. Analysts attribute this sideways movement to profit-taking by long-term holders and miner selling, counteracting the positive impact of spot ETF uptake. Coinbase Institutional’s weekly report notes that Bitcoin’s current price might be too high for many retail investors, evidenced by increased open interest in BTC options and a positive 25-delta put-call skew on 30-day contracts. This suggests a short-term protective stance through put options.
Friday’s closing price (UTC) saw BTC fall below its 50-day simple moving average (SMA) for the first time since mid-April, a potential trigger for further chart-driven selling and a possible drop below $26,000. However, some, like market observer Cas Abbé, remain bullish, citing strong buying pressure indicated by on-balance volume, predicting a potential price rise to $130,000-$135,000 by the end of Q3. The contrasting perspectives highlight the uncertainty within the market.
