Bitcoin Traders Hedge Against Potential Downturn
Bitcoin traders are increasingly hedging due to caution in broader financial markets ahead of significant U.S. economic data.
The options market indicates a defensive stance among investors with rising demand for protective contracts, particularly put options, which allow holders to sell Bitcoin at a set price.
Nick Forster, founder of Derive.xyz, notes that traders are paying a premium for downside protection not seen this year, focusing on selling options in the $75,000 to $70,000 range until March.
In contrast, demand for call options, permitting purchases at a fixed price, has weakened, with many contracts now reflecting higher market price expectations.
Forster highlights this trend as creating muted volatility, reflecting uncertainty in the market with little momentum towards the $100,000 level.
Additionally, QCP Capital reports early Asian trading showing contradictory signals with increased demand for longer-dated call options, suggesting a potential rebound from the $75,000 support level pre-election.
Bitcoin recently experienced a 3.8% price increase, reaching $82,375, recovering losses from around $77,000.
This defensive outlook parallels broader market sentiments; the S&P 500 dropped 0.76% and the Dow Jones by 1.14% as investors prepare for the Consumer Price Index (CPI) report due Wednesday.
Economists predict a 0.3% rise in February’s headline inflation, which could relieve risk assets including crypto and equities and influence the Federal Reserve’s rate-cutting considerations.
In Europe, the STOXX 600 index fell 1.43%, while oil prices saw a slight increase, with Brent crude settling at $69.97 per barrel.
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