Unlocking Bitcoin ETF Profits: Experts Reveals “Best” Trading Strategy
28 Noviembre 2023 - 12:00PM
NEWSBTC
The potential approval of a Bitcoin ETF (Exchange Traded Fund) is
bound to open new opportunities for traders. The expectations
surrounding this event impact the market now, but an expert
believes they will have a more substantial effect in the coming
months. Related Reading: Bitcoin Price Alert: $48,000 By
Early January, Forecasts Proven Indicator As of this writing,
Bitcoin trades at $37,400 with a 1% profit in the last 24 hours.
Over the previous week, the cryptocurrency stayed in the green with
a 3% profit, holding the critical level of $37,000 despite the
increase in selling pressure. The Lucrative Strategy In
Anticipation Of Bitcoin ETF Approval As Bitcoin’s value soars with
a remarkable 125% increase this year, a new trading strategy
emerges, promising high returns in the wake of the anticipated
Bitcoin ETF. A seasoned market analyst, Markus Thielen, unveils
insights into leveraging the evolving crypto market dynamics for
profitable trading in an essay posted by options platform Deribit.
Thielen’s analysis reveals an “unusual” trend in the Bitcoin
market: despite its significant rally, the 30-day realized
volatility remains at a modest 41%, starkly contrasting to the
5-year average of 63%. According to the analyst, this subdued
volatility reflects a declining interest in leveraged Bitcoin
options, a direct consequence of institutional players entering the
crypto arena. These players, holding significant Bitcoin assets,
will likely sell volatility, fostering a more stable market
environment that mirrors traditional financial markets. In this
landscape, the strategy of selling strangles (120% call and 80%
put) on a 30-day rolling basis stands out. According to Thielen,
this approach has shown profitability in approximately 23% of cases
over the past year, as seen in the chart below, marking a
significant improvement from the decentralized finance (DeFi)
summer’s high-risk profile. At that time, DeFi protocols attracted
billions in capital to the crypto ecosystem contributing to the
incipient Bitcoin rally. While there are differences in the current
market dynamics, options players are likely to benefit from this
strategy. This strategy, particularly effective during low-risk
periods, suggests a window of opportunity for traders to capitalize
on before introducing institutional influence. Institutional
Involvement Expected to Stabilize Bitcoin Market The anticipated
launch of the Bitcoin ETF is set to transform the market further.
This event is expected to recalibrate the put/call ratio, which
leans heavily toward calls. Thielen compares it to the S&P 500,
where the put/call ratio has been more balanced. The Bitcoin market
might soon witness a similar equilibrium, presenting an opportunity
for traders to harness volatility through a sell-put strategy.
Furthermore, Thielen notes that the post-ETF approval phase could
be the last chance for traders to exploit high volatility levels.
Once institutional players begin systematically selling volatility,
the market is expected to enter a phase of reduced price
fluctuations, making volatility-based strategies less effective.
The analysis also touches upon Bitcoin’s correlation with broader
market indicators like the VIX index. While the Bitcoin market has
maintained high volatility relative to the VIX index, this gap is
anticipated to narrow, offering traders a strategic edge in timing
their trades effectively. Related Reading: Bitcoin Bull Run Is Only
Just Starting, According To This Metric In conclusion, as the
Bitcoin ETF approaches and institutional participation increases,
savvy traders can look towards selling strangles as a strategic
approach to capitalize on the current market conditions. Cover
image from Unsplash, chart from Deribit and Tradingview
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