Research Summary
The report discusses the bullish trend in the crypto market, particularly Bitcoin, and suggests a Call Ratio Spread strategy for traders. It highlights the increasing inflows into Spot Bitcoin ETFs and political support as key factors driving the market optimism. The report also provides a step-by-step guide on how to implement this strategy on Deribit.
Key Takeaways
Bullish Crypto Market
- Market Optimism: The report indicates a bullish trend in the crypto market, driven by increasing inflows into Spot Bitcoin ETFs and political support in the US. Donald Trump’s pro-crypto stance, as evidenced in his speech at the Libertarian Convention, is also boosting market sentiment.
Bitcoin’s Potential Rally
- Technical Analysis: The report suggests that Bitcoin shows potential for another rally towards $74,000. This is based on the positive reaction from the demand zone at $67,055 and the lack of significant retracements after the price touched approximately $71,970.
Call Ratio Spread Strategy
- Trade Structure: The report proposes a Call Ratio Spread strategy, which involves buying an Out of The Money (OTM) Call option and selling two of the same option type, further OTM. The suggested trade structure is to buy 1x BTC-31MAY24-$72,000-C @ $360 and sell 2x BTC-31MAY24-$74,000-C @ $142.
- Profit and Risk: The maximum profit from this strategy is $1924 per Bitcoin, with a net debit of $76 per Bitcoin. However, losses beyond the initial debit are possible due to the position’s net short call exposure.
Target Price
- Price Prediction: The report sets a target spot level of less than $74,000. If Bitcoin is at $74,000 when the options expire on May 31st, traders will be at maximum profit from the strategy.
Trade Execution on Deribit
- Step-by-step Guide: The report provides a step-by-step guide on how to implement the Call Ratio Spread strategy on Deribit, a popular cryptocurrency futures and options exchange.
Actionable Insights
- Monitor Bitcoin’s Price: Traders should keep a close eye on Bitcoin’s price movement, particularly around the $74,000 mark, as it could indicate potential profit from the Call Ratio Spread strategy.
- Consider Call Ratio Spread Strategy: Given the bullish market trend, traders might consider implementing a Call Ratio Spread strategy, which could yield maximum profit if Bitcoin reaches $74,000 by May 31st.
- Assess Risk Tolerance: Traders should assess their risk tolerance before implementing this strategy, as losses beyond the initial debit are possible due to the position’s net short call exposure.
