Bitcoin declines as investors buy $ 22,000 and $ 20,000 options

[ad_1]

Bitcoin is down a day after the options market saw increased demand for out-of-the-money or exercise put 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 via the institution-focused over-the-counter (OTC) Paradigm. Similar volume crossed the strip for the $ 20,000 put expiring on December 31st.

Related: Bitcoin Trending Down With Possible Break Of $ 30,000 Support

“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 upward over the long term. The six-month put-call asymmetry, which measures the cost of puts versus calls, remains anchored below zero. Clearly, longer calls or bullish bets are more expensive than puts.

Related: Bitcoin Network Sees Fourth Direct Downward Difficulty Adjustment

However, one-week, one-month, and three-month buy biases indicate a negative bias with bearish impressions.

Also Read: Why Bitcoin Must Defend $ 30,000

The story continues

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 past few weeks may resort to hedging – taking a short position in the futures or spot market – leading to a deeper drop. .

Related stories

[ad_2]