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Bitcoin Options Whales Bet on a Moderate Price Drop by March 29

A massive Bitcoin options trade was executed on Tuesday, signaling a bearish outlook for the leading cryptocurrency in the short term. According to Greekslive, a platform that tracks options data, a butterfly spread with a notional value of $20 million was traded on the Deribit exchange. This complex strategy involves buying and selling four different options contracts with the same expiration date but different strike prices.

The trader who initiated this trade is betting that Bitcoin will fall slightly from its current price of around $50,000 before March 29, 2024, the expiration date of the options. The trade has a maximum profit point of $47,000, which means that the trader will earn the most money if Bitcoin closes at that price on March 29. The trade also has a short implied volatility component, which means that the trader expects the price fluctuations of Bitcoin to decrease in the coming weeks.

The trade has a limited maximum loss of around $1.6 million, which will occur if Bitcoin falls below $44,000 or rises above $49,800 by March 29. In other words, the trader is confident that Bitcoin will stay within a narrow range until the end of the month.

This trade is one of the largest options trades ever recorded on Deribit, the dominant platform for Bitcoin options trading. It also reflects the sentiment of some of the big players in the market, known as whales, who have been increasing their short positions in recent days. According to data from Skew, another options analytics platform, the put-to-call ratio, which measures the number of bearish bets versus bullish bets, has risen to its highest level since January.

Some analysts believe that the whales are hedging their spot holdings or taking profits after Bitcoin reached a new all-time high of over $58,000 in February. Others suggest that the whales are anticipating a correction in the market, as Bitcoin faces strong resistance at the $50,000 level and faces increased regulatory scrutiny from governments around the world.

Whatever the case, the options market shows that not everyone is expecting Bitcoin to hit new highs in the near future. While some traders are still optimistic about the long-term prospects of the cryptocurrency, others are preparing for a possible downturn in the short term.

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