This is how professionals trade Bitcoin safely while it is trading near $ 40,000


Investors tend to define the market as either bullish or bearish, but sometimes the price can stay within a certain range for an extended period of time.

This type of sideways movement is not necessarily stable as the cryptocurrency markets are highly volatile due to a number of uncertainties and the early adoption cycle.

Related articles

For example, investors who concluded after the first week of 2021 that the Bitcoin (BTC) bull run was over are likely to regret that decision.

Bitcoin price at Coinbase in USD, January 2021. Source: TradingView

As of January 8, Bitcoin price was trading on a descending channel within a range of $ 10,000. The movement lasted 26 days until it finally erupted in early February.

Bitcoin price at Coinbase in USD, August 2020. Source: TradingView

In August and September 2020, Bitcoin had two different time periods. However, it is not possible to view these moves as a bull market. On the flip side, bears had little reason to celebrate as the $ 10,000 low was tested multiple times, but the market rebounded from it.

Is Bitcoin Price In An Ascending Channel?

While it seems premature to name it, chances are Bitcoin may have entered a positive range of $ 40,000 by the end of June.

Bitcoin price at Coinbase in USD, current. Source: TradingView

The current range shows a range of $ 37,000 to $ 43,000 for June 25, but with the extreme volatility of crypto, the support and resistance levels of the channel are sometimes drastically tested.

There is reason to believe that an impending short squeeze could quickly restore $ 50,000 support to Bitcoin, given that MicroStrategy has raised $ 500 million and Paul Tudor Jones intends to close his BTC position increase.

On the flip side, there are also fears that US Treasury Secretary Janet Yellen’s remarks about the use of digital assets for money laundering and illegal payments pose a threat to the price of Bitcoin. In addition, Gary Gensler, chairman of the U.S. Securities and Exchange Commission recently raised concerns about the lack of regulation of crypto exchanges.

Smart traders take less risk with range trading moves

For options traders, it is sometimes the best option to stick to the current range, especially for short-term periods. This is where the Christmas tree spread strategy with puts comes into play.

Deribit Position Builder Profit and Loss Simulator. Source: Deribit

Rather than betting on a bull or bear market, this option strategy uses protective put options to benefit traders with a neutral stance. The investor will benefit if Bitcoin stays between $ 37,170 and $ 44,000 on June 25th. Therefore, it offers protection from 8.5% movement in either direction.

To do this, one has to buy 2 BTC worth $ 36,000, sell 3.33 BTC worth $ 40,000, and buy an additional 1.33 BTC of the $ 46,000. Each contract matures on June 25th.

The Christmas tree spread with puts is a low risk strategy

Since there are less than 11 days to expire on June 25, it can be assumed that the market is very likely to remain in this range. However, this strategy offers a maximum loss of 0.062 BTC ($ 2,515 at $ 40,570) in the event of a surprise move.

In terms of profit, the strategy can make a profit of 0.1375 BTC ($ 5,500) at $ 40,000.

Hence, it seems like a wise choice for an investor who expects the current bullish momentum uptrend to continue. It’s worth noting that most derivatives exchanges offer options trading as low as 0.10 BTC.

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Every step of investing and trading involves risk, so you should do your own research when making a decision.