Bitcoin Traders Embrace Bullish Strategy with $9B in Options Market

Bitcoin traders are increasingly selling put options, interpreting it as a bullish sentiment towards BTC price movements. The cumulative delta for BTC options and ETFs stands at $9 billion, showing high sensitivity to price changes. With Bitcoin recently rising above $92,000, these trends reflect a growing optimism among long-term holders.

As per recent market insights, Bitcoin traders have started what many are calling a bullish strategy—not unlike selling insurance. In the options landscape, it’s becoming clearer that cash-secured put selling through stablecoins is on the rise, signalling a certain level of optimism around BTC’s future price movements, says Lin Chen from Deribit.

Traders are actually capitalising on this by writing (or selling) BTC put options. For them, it’s kinda like betting against significant drops in Bitcoin’s price while pocketing those initial premiums. And to manage any risk, they’re keeping their liquidity in the form of stablecoins, setting themselves up to buy Bitcoin if those puts get exercised. It translates into a long-term bullish stance, really.

Chen elaborates on the notion that this cash-secured put selling reflects a maturing BTC market. I mean, it shows traders are not just in it for short-term gains but are considering sustained accumulation of Bitcoin over time. They’re also diversifying their strategies by selling higher strike call options to generate extra yields on their holdings, which is putting pressure on Deribit’s DVOL index.

Interestingly enough, the DVOL index has seen quite the rollercoaster since April 7, going from 63 down to 48. Chen further discussed how those who really hold Bitcoin are looking bullish long-term, willing to weather the ups and downs of the market.

This optimism comes as Bitcoin prices have soared past $92,000 after earlier dropping to $75,000, mainly due to increased institutional interest and a flight to safety narrative. Traders have begun buying call options with strike prices at $95,000, $100,000, and $135,000, especially on platforms like Paradigm. At the moment, calls at the $100,000 mark are thriving on Deribit, with open interest exceeding $1.6 billion.

Now, let’s talk numbers—specifically the $9 billion cumulative delta in Bitcoin options and related ETFs—it’s rather staggering. This figure, reported by Volmex, is crucial because it conveys how sensitive these options are to fluctuations in Bitcoin’s price, hinting at potential volatility. Delta measures how much the premium of an options contract is likely to shift with every $1 change in the underlying asset’s price.

Maintaining a cumulative delta of $9 billion indicates traders and market makers are seriously active within the options market. They tend to engage in hedging strategies to safeguard against price swings. The current landscape shows that option deltas have surged to unprecedented levels as open interests have climbed significantly. This dynamism puts additional pressure on market-making strategies and, ultimately, can amplify price volatility. Volmex notes that it seems crypto-specific options traders on Deribit are leaning more towards bullish positions than those dealing with IBIT options.

In conclusion, keeping an eye on these market movements—especially with this increased sensitivity—could be essential for seeing the larger trends emerge in Bitcoin price fluctuations.

– Omkar Godbole is a Co-Managing Editor for CoinDesk’s Markets team, currently based in Mumbai, with a solid financial background.