Crypto Options Market Starting to Have Material Impact on Spot Market: QCP Capital

The Singapore-based crypto fund wrote in a Telegram note that the newfound strength of the crypto options market prevented bitcoin from bottoming out below $40,000.

Jan 14, 2022 at 7:23 a.m. UTC
Updated Jan 14, 2022 at 3:25 p.m. UTC

While a correlation between equities and crypto has become more apparent during the last year, Singapore’s QCP wrote that there is a limit to this correlation because of the increasing importance of the crypto options market.

  • As the bitcoin and ether markets followed the bearish sentiment of the equities market as the week began, bitcoin and ether tumbled below $40,000 and $3,000, respectively.
  • QCP wrote there was a bounce-back because of the number of strikes at the $40,000 mark for bitcoin, and the $3,000 mark for ether, held by the large holders known as whales.
  • The fund noted there was a counterparty that was buying a large amount of downside risk reversals (where a trader buys the put and sells the call) who suddenly switched positions to take profit (where they sell the put and buy the call).
  • With the volume of delta trading (simultaneously buying and selling options) on the strikes at $40,000 and $3,000, there was a creation of spot support at those levels, QCP wrote.
  • QCP said one reason why bitcoin is facing some resistance at the $44,000 market is a whale began taking profit on his $42,000 January calls as bitcoin drifted towards $44,000.
  • “We think option activity will increasingly dictate spot movements as the option market continues to grow,” the firm wrote.
The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
First Mover Asia: Bitcoin Dominates but Altcoins Lurk

Although Terra's collapse has raised existential questions about the future of DeFi, some traders appear to be preparing for a return to altcoins; BTC remains rangebound below $30,000 in Tuesday trading.

Although Terra's collapse has raised existential questions about the future of DeFi, some traders appear to be preparing for a return to altcoins; BTC remains rangebound below $30,000 in Tuesday trading.

CoinDesk - Unknown
2
CoinDesk - Unknown
NEAR Protocol

CoinDesk - Unknown
3
CoinDesk - Unknown
MOBOX

CoinDesk - Unknown
4
CoinDesk - Unknown
Moonriver

CoinDesk - Unknown