Crypto Traders Hedge Bitcoin Rally After 40% Rise in 4 Weeks, Options Data Show

In light of Bitcoin's recent near-vertical surge, some traders are looking for ways to safeguard themselves against a possible washout of leverage and subsequent price decline.

On Wednesday, the market cap of the cryptocurrency with the largest market share surpassed $59,000, indicating a 40% increase in four weeks and surpassing the 31% increase in the CD20, a measure of the broader cryptocurrency market

In the weeks preceding the mining incentive halving, the cryptocurrency has a history of producing remarkable rallies, thus its rise is in line with that trend. With the fourth halving of the Bitcoin blockchain scheduled for April, the emission per block will be reduced to 3.125 BTC.

Despite widespread agreement that this development, together with massive investments in U.S.-based ETFs, suggests a mismatch between supply and demand and the possibility of further price appreciation, some market participants have begun to brace themselves for a precipitous fall.

Since permanent financing rates indicate an overheated market that might have a correction—a decline of more than 10%—they have started buying bitcoin puts, or options to sell, at strike prices far lower than the current market pricing.

With a put option, the buyer has the opportunity, but not the responsibility, to sell the underlying asset at a fixed price by a certain date. Buying puts indicates that you are either already bearish on the market or are looking to protect your long position in the spot or futures market against potential losses. Having the option to purchase the asset, or a "call buyer," makes one inherently positive.

"The whales are buying a lot of puts under $50,000, likely spot holders to protect profits," said Greeks, a crypto block trading service provider.Those in possession of substantial bitcoin holdings were mentioned by Live in a Telegram conversation with CoinDesk.

The Greek system has processed fifty block orders worth over $5 million in the last twenty-four hours.Actual time. A few of them include open purchase bets in out-of-the-money puts with lower strikes.

"This market phenomenon is relatively rare, occurring only a few times in history in large spot-driven bull markets where spot holders buy puts for protection," according to Greeks.Live. Holding place to get the bull market's most explosive acceleration to its peak, with a little percentage of the profit going toward buying out-of-the-money options.

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