Despite traditional ETF investors willing to pay premiums to go long, Bitcoin natives selling covered calls have put a damper on a price rally.
Long-term Bitcoin (BTC) whales selling covered calls, a strategy of selling call options that give the buyer the right but not an obligation to purchase an asset in the future at a predetermined price in exchange for the seller collecting a premium, is suppressing spot BTC prices, according to market analyst Jeff Park.
Large, long-term BTC holders, also known as “whales” or “OGs,” introduce a disproportionate amount of sell-side pressure through this covered call strategy, partly because market makers are on the other side, buying the covered calls, Park said.
This means that the market makers must hedge their exposure to buy the calls by selling spot BTC, forcing market prices down, despite strong demand from traditional exchange-traded fund (ETF) investors.
