Bitcoin's price is well known for its volatility. And behind this instability mainly big whales work. Some traders are taking advantage of this to increase bullish bets. And for that BTC alternatives look cheap now. All of the options that BTC has are derivative contracts. These are a type of contract whereby buyers can purchase them at a specified time in advance. Buyers can purchase a call as a result of this contract. and thereby allow traders to profit or hedge from price rallies, whereas a put option does the opposite.
Generally, many traders consider options to be cheap when Bitcoin's underlying volatility prevails, and when they slide below the long-term average or available volatility of the asset, which is one of the main determinants of option prices, traders pick the outcomes of these options. We often see various volatility in the market. And because of this inherent volatility, traders find alternatives cheaper and choose them. Perceived volatility is price movement that has already occurred.
Bitcoin's Inherent Volatility (IV) increases when something happens around Bitcoin or some positive or negative news hits the market. As we mentioned last week the spot ETF was approved and the market became quite volatile around it. Bitcoin prices tend to fluctuate a lot around these times. We have seen a large buyer in the past buying some outright calls between the $44k straddle and the $45k or $46k strike. Due to all these reasons we see a lot of volatility in the market.
We have seen Bitcoin price and implied volatility since the beginning of last year, and while all volatility prevails, most volatilities are positively correlated. A straddle is generally understood as a non-directional strategy. These non-directional strategies are bought as call and put options at the same strike price. There is, however, some objective in buying them and that objective is to profit from an expected spike in underlying volatility. And as a result the price of the option increases. We know the ETF was approved on the 11th and since then the price of Bitcoin has taken a bit of a dump. This dump is down by over 15%. Its price came to around $41000.
A straddle involves any strategy that is non-directional. All these strategies are simultaneously buying call and put options at the same strike price. However, they indicate strategies that are not specific. For various reasons, traders usually wait to buy options cheaply due to various volatility of Bitcoin in the market. Well the market is always known for volatile conditions. Especially when various negative news comes in the market, due to this, its prices often start rising. Also, we will see a lot of volatility in the Allah market this year due to the Bitcoin halving and the approval of Bitcoin ETFs. For example, since the approval of the Bitcoin ETF, the price of Bitcoin has temporarily increased, but now we have seen a nice dump. Which came to close to forty one thousand dollars. And for all these reasons, I offer very good options.
Posted Using InLeo Alpha