Research Summary
The report discusses the current state of Bitcoin, which is facing resistance due to conflicting U.S. job data and continuous ETF outflows. It proposes a Call Ratio Spread strategy for traders expecting limited upward movement in Bitcoin’s price. The strategy involves buying a Call option that is out of the money (OTM) and selling two or more of the same option type, further OTM.
Key Takeaways
Bitcoin’s Market Resistance
- Bitcoin’s Struggle: Bitcoin is facing resistance due to conflicting U.S. job data and has fallen below the critical support level of $66,000. The key resistance levels are at $67,000 and $70,000.
- ETF Outflows: U.S. spot Bitcoin ETFs recorded $152.4 million in net outflows, marking the fourth consecutive day of daily net outflows. This indicates a lack of investor confidence in the cryptocurrency.
Call Ratio Spread Strategy
- Strategy Proposal: The report proposes a Call Ratio Spread strategy for traders expecting limited upward movement in Bitcoin’s price. This involves buying a Call option that is OTM and selling two or more of the same option type, further OTM.
- Trade Structure: An example of this strategy would be to buy 1x BTC-28JUN24-$67,000-C @ $1305 and sell 3x BTC-28JUN24-$70,000-C @ $540. The target is a spot level less than $70,000.
- Profit and Loss: The maximum profit from this strategy is $3,315/BTC with a net credit of the strategy at $315/BTC. However, significant losses are possible due to the position’s net short call exposure.
Bitcoin’s Price Resistance
- Resistance Levels: The $67,000 level is a major hurdle for Bitcoin’s price, and the maximum pain for the June 28th BTC Options expiry stands at $67,000. Another strong resistance has formed at the $70,000 price level.
Actionable Insights
- Consider the Call Ratio Spread Strategy: Traders expecting limited upward movement in Bitcoin’s price may consider implementing the Call Ratio Spread strategy. This involves buying a Call option that is OTM and selling two or more of the same option type, further OTM.
- Monitor Bitcoin’s Resistance Levels: Traders should keep a close eye on Bitcoin’s resistance levels at $67,000 and $70,000. These levels could provide important insights into Bitcoin’s future price movements.
- Be Aware of Potential Losses: While the Call Ratio Spread strategy can yield profits, traders should also be aware of the potential for significant losses due to the position’s net short call exposure.
