Crypto Options Traders Expect Rangebound Market, Hedge with Puts
CryptoNewsTerminal Staff03 Jun, 2024
Crypto Options Traders Expect Rangebound Market, Hedge with Puts
Traders are anticipating a rangebound market for Bitcoin (BTC) and Ethereum (ETH) in the near term, according to an analysis by Deribit's Chief Commercial Officer Luuk Strijers. This expectation is reflected in the implied volatility of BTC and ETH options, which indicates that traders are pricing in a low probability of significant price movements. Some traders are purchasing put options as a hedge against potential declines. Put options give the buyer the right, but not the obligation, to sell an asset at a specified price within a certain time frame. By buying put options, traders can protect themselves against downside risk in the event that the market falls. However, Strijers also notes that ETH could rally if the US spot ETH exchange-traded fund (ETF) launches earlier than expected in June. An ETF would provide investors with an easy way to gain exposure to ETH without having to purchase and store the cryptocurrency themselves. If the ETF is approved, it could attract significant investment and drive up the price of ETH.
