The world’s largest cryptocurrency Bitcoin (BTC) has remained relatively stable trading at $43,000 levels for a while. However, the Bitcoin options data suggests that investors could witness some price volatility going ahead.

Major Bitcoin Options Block Trade Can Have Market Implications

In recent market activities, Greeks.Live reports a notable development in the Bitcoin options space that could signal the next significant move for the cryptocurrency. While Bitcoin has experienced relative stability, a substantial block trade has caught the attention of analysts.

The significant trade involved the purchase of 1,500 sets of February Strangles coupled with the sale of 1,500 sets of April-wide Strangles, strategically designed to amortize the overall cost of the portfolio. Remarkably, the entire portfolio associated with this transaction held a notional value of $260 million, representing over 30% of the day’s total volume.

The accompanying profit and loss (PNL) chart reveals that the investor behind this trade is anticipating a substantial market movement of 10% or more in February. What makes this move unique is the uncertainty regarding the direction of this anticipated shock, a relatively rare strategy in large-scale investments.

Courtesy: Greeks.Live

Upon further analysis of the transaction data, it was observed that the investor had previously held a short position in 45,000 Call options expiring at the end of February, indicating a shift from short volatility to a long volatility stance.

Given the comprehensive examination of these details, traders shall exercise caution regarding short volatility positions, as the market may witness a notable 10% swing within the current month based on this substantial $260 million block trade. The strategic shift from short to long volatility also suggests a heightened expectation of increased market turbulence in the coming weeks.

Bitcoin And Crypto Market Snapshot

BTC’s major term option implied volatilities (IVs) have reached remarkably low levels, dropping below 40% for short and medium-term IVs. This makes the current market conducive for cost-effective buying. Currently experiencing oscillations, the break-even ratio for purchasing short-term options on the lower side is notably high.

In the cryptocurrency interest rate market, leverage levels are gradually increasing, showcasing a recovery from the recent low. Notably, high-interest orders have recently emerged, suggesting that individuals with surplus funds should consider re-entering the lending market to capitalize on the opportunity.

The post Bitcoin Options Block Trade Hints Strong Price Volatility In Feb appeared first on CoinGape.

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Filed under: News - @ January 1, 1970 12:00 am