Bitcoin Whales’ Covered Calls May Dampen Price Rally Despite ETF Demand
The post Bitcoin Whales’ Covered Calls May Dampen Price Rally Despite ETF Demand appeared on BitcoinEthereumNews.com.
Bitcoin’s spot price remains suppressed despite strong ETF demand because long-term holders, or whales, are selling covered calls on their holdings. This strategy generates premiums but introduces sell-side pressure as market makers hedge by selling spot BTC, countering the upward momentum from traditional investors. Whales’ covered calls create net downward pressure on Bitcoin prices by adding negative delta to the market without new liquidity. Market makers buying these calls must hedge exposure, leading to spot BTC sales that dampen rallies. 24.4% of traders anticipate a Federal Reserve rate cut in January 2025, potentially boosting BTC as liquidity increases, according to CME Group’s FedWatch tool. Discover how Bitcoin whales selling covered calls are suppressing prices amid ETF inflows. Explore impacts and forecasts for 2025 in this analysis—stay informed on BTC market dynamics today. What Are Covered Calls and How Do They Impact Bitcoin Prices? Covered calls involve selling call options on Bitcoin holdings that the seller already owns, allowing them to collect premiums while potentially obligating them to sell the asset at a set price if exercised. In the Bitcoin market, long-term whales employing this strategy are exerting downward pressure on spot prices, even as demand from spot Bitcoin exchange-traded funds (ETFs) remains robust. This dynamic highlights the influence of derivatives trading on underlying asset prices, where options activity can override direct buying interest. Long-term Bitcoin holders, often referred to as whales or original gangsters (OGs), have been actively selling these covered calls to generate income from their dormant stacks. According to market analyst Jeff Park, this approach introduces disproportionate sell-side pressure because market makers, who purchase these calls, hedge their positions by selling spot Bitcoin. As a result, despite investors in traditional ETFs paying premiums to accumulate BTC exposure, the overall price fails to rally significantly. The volatility skews of…
