Covered call strategies may be limiting Bitcoin's upside, analysis suggests

Bitcoin's upward momentum could be constrained by activity in the options market, according to an analysis by Cointelegraph. The report notes that as yields on cash-and-carry strategies—which involve buying spot assets while shorting futures—have fallen below 5% annually, investors are increasingly turning to covered calls. This strategy, which involves holding spot BTC while selling call options to generate income, can offer annual returns between 12% and 18% but may suppress the asset's price ceiling. Evidence of this trend can be seen in Bitcoin's implied volatility (IV) for contracts throughout 2025, which has decreased from 70% to around 45%. Cointelegraph suggests this decline indicates that consistent selling of call options by institutional players has reduced overall market volatility. However, the analysis also points out that there is significant buying demand for call options to counter the selling pressure, and demand for put options to hedge against downside risk remains robust. This dynamic is ultimately viewed as a sign of a maturing market as institutional capital enters to profit from volatility.