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Bitcoin is down a day after the options market saw increased demand for out-of-the-money put or exercise options below $ 22,000 and $ 20,000.
The major cryptocurrency was trading at a three-week low at $ 30,700 at the time of publication, which is a 3.5% drop on the day. The decline tipped the crucial 50-week Simple Moving Average (SMA) support from $ 32,250 in resistance.
On Sunday, 500 of the $ 22,000 put option contracts expiring Dec. 31 changed hands through the institution-focused over-the-counter (OTC) Office Paradigm. Similar volume crossed the strip for the $ 20,000 put expiring on December 31st.
“There was an interest in buying BTC puts for December in a significant size,” said Darius Sit, CEO of Singapore-based QCP Capital. “We did the market for most of the big block trades over the weekend. There was also a decent interest in selling the September BTC put options. “
Market makers are always on the opposite side to traders / investors and manage a direction neutral portfolio. This essentially means that the buyers of the $ 20,000 and $ 22,000 puts expiring Dec 31 were investors, most likely adding downside hedges against long positions in the spot / futures market.
A put option gives the buyer the right but not the obligation to buy the underlying asset at a predetermined price on or before a specific date. A sell buyer is implicitly bearish on the underlying asset, in this case bitcoin.
Overall, the options market is still biased to the long term. The six-month put-call bias, which measures the cost of puts versus calls, remains anchored below zero. Clearly, longer calls or bullish bets are more expensive than puts.
However, one week, one month and three month buying biases indicate a negative bias with bearish impressions.
Bitcoin is currently changing hands near the lower end of the $ 30,000 to $ 40,000 two-month trading range.
If the $ 30,000 support breaks, traders who have sold $ 30,000 puts in the last few weeks may resort to hedging – taking a short position in the futures or spot market – leading to a downside. deeper.
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