Options Market Expects Year-End Bitcoin Rally Despite Sell-Off, Q3 Weakness Eyed

Options Market Expects Year-End Bitcoin Rally Despite Sell-Off, Q3 Weakness Eyed

Despite the recent Bitcoin sell-off, the options market remains heavily skewed to the upside, suggesting that the market still expects a year-end rally. This is according to cryptocurrency exchange QCP Capital, which shared its insights on its official Telegram channel. The firm added that while significant buying of long-term options at BTC strikes of $100,000 and $120,000 was observed, the overhang from Mt. Gox redemptions and the related market uncertainty suggest that Q3 will likely see weakness. The options market is a derivatives market where traders can buy and sell options contracts, which give the buyer the right but not the obligation to buy or sell an underlying asset at a specified price on or before a certain date. The skew in the options market towards the upside suggests that traders are betting on a rise in Bitcoin's price in the coming months. This is despite the recent sell-off, which saw Bitcoin's price drop from over $40,000 to below $30,000. However, QCP Capital warns that the overhang from Mt. Gox redemptions and the related market uncertainty could weigh on Bitcoin's price in the short term. Mt. Gox was a major Bitcoin exchange that collapsed in 2014, and its creditors are currently in the process of receiving their Bitcoin back. This has led to concerns that a large number of these creditors will sell their Bitcoin, which could put downward pressure on the price. Overall, the options market is signaling that traders are expecting a year-end rally in Bitcoin's price. However, the overhang from Mt. Gox redemptions and the related market uncertainty could weigh on Bitcoin's price in the short term.