The post Bitcoin Rangebound As Traders Manage Risk Via Options appeared on BitcoinEthereumNews.com. High Bitcoin options volumes indicate there is still significantThe post Bitcoin Rangebound As Traders Manage Risk Via Options appeared on BitcoinEthereumNews.com. High Bitcoin options volumes indicate there is still significant

Bitcoin Rangebound As Traders Manage Risk Via Options

2 min read

High Bitcoin options volumes indicate there is still significant interest and capital present in crypto derivatives markets, according to derivatives exchange Deribit, but risk is now being carefully managed, which could explain Bitcoin’s recent price movements.

Bitcoin trading near $90,000 right now “looks a lot clearer when you view it through positioning rather than just price,” the Coinbase-owned derivatives exchange said on Wednesday.

Bitcoin (BTC) appears to be stuck due to concentrated options open interest (OI) around current strike prices for the large Jan. 30 expiry, it added.

This means a “significant share of market exposure is structured through options rather than outright leveraged futures,” they stated. 

Bitcoin has been trading in a range-bound channel since mid-November, finding support around $85,000 and resistance around $95,000, and oscillating between the two levels. 

Capital is present, but risk is managed 

Deribit explained that high options volume in near-term expiries, particularly put options, suggests downside hedging.

Related: Bitcoin futures OI rebounds 13% as analysts see cautious return of risk appetite

“Rallies may meet supply from risk reduction, dips can find buyers adjusting exposure, and momentum often has to work harder to expand,” it stated. 

Total Bitcoin options OI, or the notional value of contracts yet to expire or be closed, is currently around $38.7 billion and has been rising steadily this month, according to CoinGlass.

Large month-end Bitcoin options expiry looming 

The coming Friday will see an end-of-month Bitcoin options expiry worth around $8.4 billion in notional value, according to Deribit. 

The put/call ratio is 0.54, meaning there are almost twice as many long contracts expiring as shorts. Max pain, the level at which most contracts will expire at a loss, is currently $90,000, and OI is most concentrated around the $100,000 strike price. 

Bitcoin options OI by expiration. Source: Deribit

Magazine: Hong Kong stablecoins in Q1, BitConnect kidnapping arrests: Asia Express

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