In a recent development, bitcoin traders are seeking protection from potential price declines, according to Luuk Strijers, Chief Commercial Officer of Deribit, a leading crypto options exchange

The traders are resorting to buying put options, which allow them to profit from or hedge against a decline in the asset's price.

This move comes as the highly anticipated SEC approval of spot bitcoin ETFs is set to take place on Wednesday, leading some to expects a potential "sell the fact" move.



Key-points:

• Strijers noted that puts are overbought and calls are being sold, indicating a demand for protection against potential price declines. This is reflected in the one-month BTC call-put skew, which has flipped negative in the past 24 hours, reaching a low of -2.69% for the first time since October 13. The one-week, two-month, and three-month skews have also turned negative, showing a renewed demand for hedging against bitcoin weakness.

• The growing demand for protection against potential price declines suggests that traders are becoming increasingly cautious in light of the upcoming ETF approval. While some may be concerned about a potential delay in approvals, others may be preparing for the possibility of a sell-off following the highly anticipated event.

The SEC will play a critical role

As the cryptocurrency market continues to evolve, regulatory bodies such as the Securities and Exchange Commission (SEC) will play a critical role in shaping its future. The recent incident highlights the need for increased transparency and accountability in the market, as well as the importance of addressing concerns around market manipulation.

The State of Bitcoin Market

The recent developments in the bitcoin market indicate a growing demand for protection against potential price declines. Traders are turning to put options as a means of hedging against potential weakness, while the one-month call-put skew has flipped negative.

As the SEC approval of spot bitcoin ETFs approaches, traders may become increasingly cautious, leading to a potential sell-off.

Regardless of the outcome, it is clear that regulatory bodies must prioritize transparency and accountability in the market to ensure the continued growth and stability of the cryptocurrency industry.


References:

Godbole, O. (2024, January 10). Bitcoin Traders Seek Protection From Price Declines as ETF Deadline Looms: Deribit. Retrieved from https://www.coindesk.com/markets/2024/01/10/bitcoin-traders-seek-protection-from-price-declines-as-etf-deadline-looms-deribit/

Freepik - Goodstudiominsk. (n.d.). Retrieved January 5, 2024, from https://www.freepik.com/author/goodstudiominsk

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