Bitcoin‘s (BTC) value has recently soared past the $59,000 mark, marking a substantial 40% upswing within a span of four weeks. The swift price hike has led some market participants to initiate safeguarding actions in anticipation of a potential steep drop-off. Crypto analytics platform Greeks.Live has observed these precautionary behaviors among investors.
Crypto Market Enthusiasm Peaks Before Halving Event
The cryptocurrency market is currently experiencing a significant bull run, triggered in part by the approaching Bitcoin block reward halving. Historically, such events have preceded market rallies due to the reduced Bitcoin block reward miners obtain, which is set to be slashed by half. The anticipation of Bitcoin’s fourth block reward halving, slated for April, is palpable, as it will cut the issuance of new BTC by 50% to 3.125 BTC.
Strategic Moves with Bitcoin Put Options
In the midst of a general market upswing and robust capital inflows into US exchange-traded funds (ETFs), certain investors have decided to brace themselves for a potential market downturn. They are doing so by acquiring Bitcoin put options, which grant the right to sell Bitcoin at a pre-agreed price, thereby providing a safety net in the event of a price drop.
Recent data from Greeks.Live reveals a flurry of activity in the options market, especially in the last day, with hefty block orders valued over $5 million. These orders predominantly feature strike prices under $50,000, signifying a trend among prominent Bitcoin investors to secure their profits against possible downward movements.
The approach of purchasing put options to hedge against market slumps is not a common practice, but it is a strategic choice during strong bullish periods. It presents an opportunity for investors with significant Bitcoin assets to shield their investments while retaining the possibility of capitalizing on further price growth.