As the crypto community anticipates a positive outcome for Bitcoin exchange-traded funds (ETFs), options traders are taking precautions ahead of the U.S. Securities and Exchange Commission’s (SEC) decision on January 10. While many consider ETF approval likely, the options market reveals a surge in open interest for puts expiring on January 12, allowing holders to sell Bitcoin. The put-to-call ratio for these contracts, with notable strike prices at $44,000, $42,000, and $40,000, is higher, indicating a hedging strategy as traders brace for potential market reactions.
Bitcoin’s remarkable 60% surge since mid-October, driven partly by ETF expectations, has led to increased speculative interest, prompting traders to safeguard leveraged positions with put options. The Jan. 12 options with protection against negative SEC decisions have a put-to-call ratio of 0.69, suggesting a cautious sentiment among traders. The expectation of a significant move in either direction is prompting investors to spend premiums on BTC puts.
While Bitcoin’s recent rally has offset its 2022 losses, the market remains cautious about the potential impact of ETF approval on the token’s price. The looming decision has fueled a surge in demand for Bitcoin options, particularly those expiring around the deadline, as traders prepare for potential volatility. Despite optimistic expectations, some analysts foresee a “sell the news” scenario post-approval, predicting resistance in the $45,000 to $48,500 range and a possible retracement to $36,000 levels before a renewed uptrend.
