Bitcoin It’s been 7 years since we’ve had such a cold winter.
The largest crypto token, which trades with a market capitalization of $1.3 trillion, is down 35% on its strength relative to cryptocurrencies. Nasdaq-100 It peaked nearly a year ago, during which time major tech indexes also rose by about the same amount. The resulting gap was 70 percentage points, the most favorable level for stocks since March 2019, according to data compiled by CNBC.
If option flow is an indicator, then so-called Bitcoin “HODLrs” (“hold it till you die” believers) are considering folding.
Nasdaq 100 vs. Bitcoin, 1 year
For the first time in recent weeks, iShares Bitcoin Trust (IBIT) and michael saylor strategyPut volume exceeded call volume on Tuesday, with MSTR and IBIT seeing more calls sold than bought, turning bearish. According to ThinkOrSwim data, the strategy saw nearly 100,000 puts bought compared to less than 37,000 calls. According to SpotGamma, the most popular contract by volume is a 100-strike put expiring on June 18th – a bet on year-to-date lows.
This sentiment spread to options on crypto exchange Coinbase, where more than twice as many calls were sold as there were bought on Tuesday.
While it’s difficult to pinpoint a single cause for crypto’s recent slump, investors have cited several possible reasons: Strategies sold their first Bitcoin in four years on Monday, investors secured space for upcoming IPOs, and the popularity of alternatively traded derivatives like zero-day options and perpetual futures is drawing attention away from spot crypto.
“We’re starting to see more traditional crypto influencers posting options trades,” Charlie Moon, a technology and momentum specialist at Prosper Trading Academy in Chicago, said by phone. “People used to fuel their desire for day trading with Bitcoin, but now they are fulfilling that desire elsewhere.”
A closer look at Bitcoin’s relative performance against stocks, which was just as bad in 2018 and 2019, provides a simpler explanation. Even if stock prices don’t go crazy, rising interest rates could still be the main catalyst for cryptocurrencies. Bitcoin’s toughest “winters” were in 2022 and 2018, when the Fed was raising interest rates.
“If you look at the cost of funding from U.S. Treasuries to Japanese Treasuries, yields are all going up,” said David Dziekanski, CEO of Quantify Funds, which runs the income-stack Bitcoin and gold ETF ISBG. “As this market rises for innovation and productivity, it makes sense that rare assets will be left behind. Bitcoin needs to be able to diversify so it doesn’t become an itemized risk.”
