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.
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…
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