Bitcoin likely to stay in tight trading range amid market uncertainty: QCP Capital
2024-08-26

Optimism for bitcoin has increased since Fed Chair Jerome Powell's Jackson Hole speech last Friday, but derivatives data indicates lingering market hesitation, according to analysts.
"While the move higher in the bitcoin price has been decisive since Fed Chair Jerome Powell's speech, the [implied volatilities] are indicating hesitation in the market, as front-end vols have drifted lower," QCP Capital analysts said. They added that bitcoin is likely to continue trading within a tight range of $62,000 to $67,000 in the near term.
Fed's dovish tones at the Jackson Hole symposium
Since U.S. Federal Reserve Chair Jerome Powell's dovish tones at the Jackson Hole Symposium last Friday, QCP Capital analysts have observed aggressive call spread buying, but specifically for longer-term options expires.
Following Powell's speech, in which he stated that "the time has come for monetary policy to adjust," derivatives data shows that investors are positioning for potential price increases, signaling growing optimism about bitcoin’s future performance in a potentially favorable monetary environment. However, the QCP Capital analysts highlighted data suggesting that derivatives traders do not anticipate a potential bitcoin price appreciation in the near term.
"We have witnessed heavy selling of calls around the $100,000 strike out to March 2025, and this could mean that the market is bullish but not expecting a blow-out move so soon," they said.
Monday's QCP Capital report added that bitcoin implied volatility is currently more skewed for puts than calls until October expirations. If the implied volatility is more skewed towards puts over the coming months, it suggests the market is hedging for potential price drops in the near term.
"This is surprising given the overwhelmingly bullish sentiment and it possibly indicates that the market was well positioned for this move and was very quick to take profit by selling calls," said the QCP Capital analysts.
Bitcoin has decreased by around 1.5% in the past 24 hours, now changing hands for around $63,239, according to The Block's Price Page.
Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.
© 2024 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.