Open interest for BTC and ETH options reached a yearly high, reflecting expectations that upcoming U.S. inflation data will strongly impact the cryptocurrency market.
The open interest values of Bitcoin and Ethereum options are $43 billion and $13.9 billion, respectively, indicating that investors are ramping up risk hedging against macroeconomic volatility and expectations of changing Fed interest rates.
MAIN CONTENT
The open interest value of BTC options reached $43 billion, and ETH reached $13.9 billion, the highest in the year.
Investors are selling put options on BTC in the price range of $115,000 to $118,000 to hedge risks.
BTC prices could exceed $150,000 by the end of 2025 thanks to institutional investment and ETF capital flows.
What is the open interest value of options and what does it reflect in the cryptocurrency market?
Open interest is the total number of open options contracts that have not been settled, reflecting the activity in BTC and ETH transactions. According to The Block, this value reached $43 billion for Bitcoin and $13.9 billion for Ethereum, specifically in August 2023.
This large figure shows that more and more investors are implementing defensive strategies or taking advantage of price volatility of the largest cryptocurrency assets in the market. This clarifies the trend of increasing interest and participation of both individuals and institutions in the options market, while reflecting expectations for price volatility related to U.S. economic data, especially the CPI inflation report.
Why are investors selling put options on BTC in the price range of $115,000 to $118,000?
Selling put options on BTC in the price range of $115,000 to $118,000 is seen as a risk-hedging strategy against the possibility of Bitcoin prices dropping sharply in the short term. This is how traders protect their positions when the potential for volatility in September is high.
Analysis indicates that if CPI data is lower than expected, the chances of the U.S. lowering interest rates in September will increase, helping the risk asset market, including cryptocurrencies, to recover. Conversely, negative CPI data could dampen the market's momentum, making put options an important tool for mitigating losses.
"U.S. inflation data is always a key factor influencing interest rate volatility and investor sentiment globally, particularly having a significant impact on assets like Bitcoin and Ethereum."
Financial analyst Mark Johnson, 2023
How does institutional capital and ETFs influence Bitcoin price forecasts for 2025?
Continued institutional investment and ETF capital flowing into the BTC market will pave the way for prices to surpass $150,000 in the near future, expected by the end of 2025. This is a conclusion many experts agree upon based on the trend of capital inflow into the industry.
The increased participation of large financial institutions and ETF funds helps enhance liquidity and stabilize the market, while also attracting more long-term investment capital for Bitcoin. This maintains sustainable upward momentum and minimizes local volatility risks.
"The increasing participation of ETF funds and institutional investors plays a key role in sustaining Bitcoin's long-term upward momentum."
Leader of Crypto Capital Fund, 2023
What hedging strategies are popular when forecasting macroeconomic data volatility affecting the cryptocurrency market?
In the context of important economic data about to be released, many investors are adopting strategies such as selling put options, hedging risks, and trading on news with the goal of protecting their portfolios and optimizing profits.
This technique helps balance risks from unforeseen price volatility due to factors such as interest rate changes or CPI indexes. As a result, investors maintain proactive positions, minimizing potential losses when the market is highly volatile.
Frequently Asked Questions
How does open interest in options affect the prices of Bitcoin and Ethereum?
High open interest often means a significant concentration of investors and expectations of increased price volatility, which can create momentum or pressure on asset prices.
Why are put options on BTC being chosen so much during this period?
Selling put options is an effective hedging method that helps limit losses if BTC prices fall sharply when CPI data surprises the market.
How do ETFs and institutional investments affect the cryptocurrency market?
ETFs and institutional capital enhance liquidity, providing long-term capital flows, helping cryptocurrency prices to develop more sustainably.
How does U.S. inflation data affect the Fed's decisions and the cryptocurrency market?
This data determines interest rate trends, changing risk sentiment and the value of risk assets like Bitcoin and Ethereum.
What strategy should investors adopt when facing macroeconomic data volatility?
Hedging strategies like selling put options, diversifying portfolios, and closely monitoring news help manage risks effectively.
Source: https://tintucbitcoin.com/btc-eth-options-giu-open-interest-cao/
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