BTC Bullish Bound: Navigating Choppy Markets with Bull Put Spreads

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BTC is experiencing choppy market conditions with strong support at $66,700 and potential for a breakout hence, a bullish trend is anticipated, traders might consider a Bull Put Spread strategy to capitalize on the trend.

Bull Put Spread

The proposed strategy is a Bull Put Spread and it consists of one short Put with a higher strike price and one long Put with a lower strike price. Both Puts have the same underlying and the same expiration date.

You may take this trade if you believe BTC will continue sideways to bullish momentum.

Trade Structure

(OTM Put) Sell 1x BTC-14JUN24-$66,000-P @ $922
(OTM Put) Buy 1x BTC-14JUN24-$65,000-P @ $663

Target: Spot level > $66,000

Payouts

Maximum Profit: $259/BTC

Why are we taking this trade?

In my latest insights, I anticipated the choppy market conditions as BTC’s price remained stuck between support and resistance levels. Such a market structure typically hinders any sharp movements in the underlying asset. Additionally, spot BTC ETF flows were quite low throughout the week, only reaching double digits, but they remained positive (Source: Farside Investors).

As illustrated in the attached 4-hour BTC price chart, we can see that BTC has strong support at $66,700, formed after the violation of a key resistance level, making it a significant level to consider. This support level is being respected in the market at various instances. Additionally, the price was following a trendline that seems to be breaking out, suggesting a potential breakout scenario for BTC.

BTC is just 7% away from new all-time highs, yet it isn’t making significant progress, causing traders to worry. Fed policy and Inflation data are two key variables that could push Bitcoin to all-time highs. There is also a sharp decline in Bitcoin exchange balances, indicating that whales are moving coins off exchanges in anticipation of higher prices, which is bullish. Given this optimistic environment, I expect the sideways to bullish market trend to continue in BTC. Traders might consider implementing a Bull Put Spread strategy to capitalize on this anticipated trend.

To implement this strategy, traders can sell a higher strike put option (e.g., $66,000) and simultaneously buy a put of a lower strike price (e.g., $65,000).

If Bitcoin is at or above $66,000 when the options expire on June 14th, traders will be at maximum profit from the strategy.

In case of market downturn, the maximum loss is limited to $741, Maximum loss of Bull Put Spread = Difference between strike prices of puts ($66,000 – $65,000) – Net Credit ($259).

How to take this trade on Deribit?

Step 1: Go to Combo books under the Strategy tab & Create combo.

Step 2: Click RFQ and send your order to the Combo List.

Step 3: Go to Combo list (BTC), click on your Strategy and execute.

Disclaimer

This report must not be used as a singular basis of any trading decision. The document includes analysis and views of our research team. The document is purely for information purposes and does not constitute trading recommendation/advice or an offer or solicitation of an offer to buy/sell any contract.

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