Traders Eye March Bitcoin Rally as Call Options Gain Momentum
Bitcoin markets remained bearish late Monday, as the asset briefly dropped below $92,000 due to profit-taking despite yet another massive MicroStrategy acquisition. By Tuesday morning, Asian time, it had recovered to slightly over $92,800. A few weeks after Donald Trump becomes president of the United States and implements a slew of initiatives that could benefit the market, some traders predict that the current price action will probably last until February.
We are skeptical of any New Year fireworks especially with funding healthy. January’s average returns (+3.3%) are relatively similar to December’s (+4.8%), and we could expect spot to remain in this range in the near-term before things start to pick from Feb onwards. Options flows are also reflecting similar sentiments with frontend vols drifting lower and risk-reversals most bid for Calls in March, partly due to significant March (120k-130k) Calls bought last Friday,
traders at QCP Capital
This indicates that traders anticipate a rise in bitcoin prices in March. Compared to put options, they are purchasing more call options, which yield profits if the stock increases. These options’ declining costs indicate optimism for the month of March.
Bitcoin ETFs Suffer Significant Outflows Amid MicroStrategy’s Latest Bitcoin Buy
On Monday, the Bitcoin development business MicroStrategy added 2,138 more Bitcoin to its holdings for a total of $209 million in the week ending December 29. This appears to be the company’s last acquisition of the year. Its total holdings now stand at 446,400 BTC. News of the purchase, however, did little to stop losses. The hours after MicroStrategy’s statement saw a sharp decline in Bitcoin values, and the company’s stock dropped 8% to its lowest level since early November.
The asset’s ETFs, meanwhile, had $420 million in outflows on the second-to-last day of trading before the new year, according to statistics. Leading withdrawals were $154 million in Fidelity’s FBTC, $130 million in Grayscale’s GBTC, and $36 million in BlackRock’s IBIT. After a strong first half of the month with nearly $2 billion in net inflows, the products have seen more than $1.5 billion in net outflows after December 19. A change in investor mood, perhaps toward a more cautious or pessimistic view of Bitcoin’s short-term performance, can be observed in large outflows.
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