Options Traders Bet on Bitcoin’s Post-Halving Price: Insights Revealed

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  • Implied volatility for Bitcoin options surged, indicating decreased confidence among market participants regarding price direction.
  • Amidst bearish bets ahead of the April 26 options expiry, there’s speculation that the halving event might trigger a “sell the news” scenario, akin to the market reaction following the approval of spot Bitcoin ETFs in January.

Bitcoin investors are eagerly awaiting the much-awaited event of 2024 i.e. the Bitcoin halving, scheduled to happen next week on August 20. As we know, the Bitcoin halving event will cut the BTC supply in half creating a supply shock in the market.

On the other hand, with the launch of the spot Bitcoin ETF earlier this year, the demand for Bitcoin among institutions has skyrocketed. Despite this thrust, Bitcoin is currently facing some turbulence ahead of the halving as options traders have turned nervous again, per the Crypto News Flash report. In the last 24 hours, the Bitcoin (BTC) price tanked by 6% moving all the way to $65,000 while recouping some of the losses partially as of press time.

Data shows that Bitcoin traders aren’t bullish for the April 26 expiry, which will be the first major monthly expiry after the fourth Bitcoin halving event.

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According to a report by Kaiko Research, the implied volatility for Bitcoin options surged last weekend, reversing a previous downward trend. Adam McCarthy, a research analyst at Kaiko, explained that such an increase typically indicates decreased confidence among market participants regarding price direction. When implied volatility rises, traders are often willing to pay more to protect existing positions or speculate on potential price movements, whether up or down.

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Kaiko noted a significant rise in implied volatility for contracts expiring in the next two weeks, soaring from 59% to 71% within just 2 days. This suggests an uptick in expectations for near-term volatility.

Bitcoin Halving – Sell The News Event?

Based on data from trader tracker basedmoney, traders have invested $54 million in puts, indicating a belief that Bitcoin’s price will decline ahead of the April 26 options expiry. Options are financial tools for traders to speculate or hedge against market volatility. Put options allow selling an asset at a set price, while call options enable buying it. The put-call ratio indicates market sentiment, with a higher ratio suggesting a more bearish outlook.

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There’s speculation that the upcoming halving event could follow the pattern of “buy the rumor, sell the news,” reminiscent of the brief price drop observed after the approval of spot Bitcoin ETFs by the US Securities and Exchange Commission in January. As reported by Crypto News Flash, Hong Kong is also planning to launch the spot Bitcoin ETF on Monday.

Bearish bets flooding the market have driven the maximum pain price for the April 26 options expiry to $60,000. This suggests that market makers might strive to drive the price down before April 26 since the max pain price is below Bitcoin’s current price. However, while bears dominate in April, options positioning for the rest of the year leans more towards a bullish outlook. For instance, the June 28 options expiry, following April 26, exhibits a significantly bullish put-to-call ratio of 0.36.

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