Bitcoin options traders are hedging for further downside: QCP Capital

The Block2024/07/24 11:11

By:Brian McGleenon

Derivatives market sentiment has shifted over the past 24 hours, with bitcoin options traders preparing for further downside, analysts said.Bitcoin sell-pressure is mounting from Mt. Gox creditors using Kraken for redistribution purposes, and the U.S. government sending coins to Coinbase.

The difference in implied volatility between bitcoin call and put options has decreased by three volatility points, suggesting that the market sentiment has shifted over the past 24 hours — showing caution towards the downside — according to QCP Capital analysts.

"While spot prices remain muted, the options market is painting a different picture. July 26 vols made an impressive 8-vol rally with risk-reversal dipping by 3 vols signalling caution to the downside," QCP Capital analysts said.

QCP Capital analysts noted that expectations for further downside movement in the options market are being heightened by fears of sell pressure. These concerns are fueled by the U.S. Government transferring bitcoin to Coinbase and Kraken-based Mt. Gox creditors receiving their long-awaited assets.

On Monday, an address labeled "U.S. Government: Ryan Farace Seized Funds" moved bitcoin worth nearly $4 million to Coinbase, according to Arkham Intelligence . The U.S. Government currently holds over 213,000 bitcoin, or around $14.2 billion.

Also, creditors of the collapsed crypto exchange Mt. Gox have begun receiving bitcoin and bitcoin cash transfers on the Kraken crypto exchange, according to a Telegram group of Mt. Gox creditors. The payout comes after Kraken received 48,641 bitcoin, valued at over $3 billion, from the Mt. Gox Rehabilitation Trustee on July 16, The Block previously reported .

According to QCP Capital analysts, due to sell-pressure from the U.S. Government and Mt. Gox, "bitcoin and ether prices may remain subdued until momentum builds up leading to the elections."

Mt. Gox creditors prefer to hodl?

There has been a significant increase in bitcoin withdrawals from Kraken after Mt. Gox creditors started receiving their redistributed assets, according to data from CryptoQuant.

Analysts at CryptoQuant said this could be a positive signal, indicating that they are not selling and are preparing to hold their coins, moving them from the exchange to cold wallets. "Although the volume is not high, over 5,000 bitcoin have been withdrawn in the last 24 hours," CryptoQuant analysts said.

Bitcoin BTC -0.38% 's price traded flat over the past 24 hours and is now trading at $66,473, at 6:45 a.m. ET, according to The Block's Price Page .

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.