QCP Capital, a prominent crypto investment firm in Asia, has issued a new report indicating market stabilization following last week’s sharp movements in the cryptocurrency sector. However, the firm cautioned that high implied volatility persists. This week, the market remains vigilant, anticipating significant events such as the debate between US presidential candidates Donald Trump and Kamala Harris, and the release of the US Consumer Price Index (CPI) data.
Why Are Investors Shifting to Put Options?
After last week’s steep decline, sentiment in the cryptocurrency market has been skewed towards downside risks. Until October, Bitcoin (BTC) and Ethereum (ETH) showed a rising trend in put options. This shift reflects investors‘ reactions to ongoing market uncertainties and their attempts to hedge against potential price declines.
Despite this short-term volatility, QCP Capital maintains a fundamentally bullish outlook for the cryptocurrency market. The report notes that many investors are positioning themselves for long-term gains by capitalizing on the recent low price levels.
How Effective is the Zero-Cost Trading Strategy?
QCP Capital has recommended a trading strategy using the ZERO-cost ERKO Seagull structure to efficiently represent the bullish sentiment on BTC. This strategy involves buying a call option at $70,000 with a target of $100,000 and buying a put option at $42,000, effectively bringing the cost to zero. The potential maximum payout could reach up to $30,000 per BTC, translating to an annual return of 239% if the spot price stays just below $100,000 at expiration. At the time of this recommendation, the spot reference price for BTC was $55,200.
Concrete Insights from QCP Capital’s Report
– Significant buying interest in BTC call options with strike prices of $85,000, $100,000, and $120,000 expiring in March 2025.
– Anticipation of a major price recovery over the next few years.
– Increased bullish positions among institutional investors for December and March expirations.
– The recommended ZERO-cost trading strategy offers high potential returns with minimal initial investment.
QCP Capital’s bullish outlook aligns with the recent surge in buying interest as Bitcoin’s price rebounded from the $52,500 level. Although it is uncertain if the market has definitively hit the bottom, the firm observed that some institutional investors are capitalizing on current conditions to strengthen their positions for future gains.