Bitcoin on the Verge of Posting a Strong Q2; What Options Traders Expect Next


Bitcoin is on track to post a strong second quarter this year, with the cryptocurrency currently trading up 48% from where it ended Q1.

The second quarter of the year is a historically positive time for BTC, as it has only posted losses during this time range once over the past six years. The third quarter, however, tends to be slightly more turbulent for the benchmark digital asset.

Data shows that in the six years between 2014 and 2019, the crypto has posted loses four times.

This comes as trading activity on the CME’s Options product rockets, crushing its previous all-time highs that were set in May.

As for what traders are expecting to come next, data shows that options traders are positioning themselves for Bitcoin to see short-term weakness, but long-term strength.

Bitcoin Sees Positive Performance in Q2 2020 Despite Recent Turbulence

The past few weeks have been turbulent for Bitcoin. The benchmark crypto recently rallied up to highs of $10,400 before posting a harsh rejection that led it down to lows of $8,600.

From this point, BTC rebounded back into the $9,000 region, and has been consolidating here ever since – currently trading up over 3% at its current price of $9,500.

Yesterday, sellers did attempt to shatter this trading range when they pushed it down to lows of $8,900. This selling pressure was quickly absorbed by buyers, and it has extended its long-held trading range in the time since.

Some analysts do believe that this consolidation is the crypto’s way of coiling up before it makes a big movement in the weeks ahead.

According to data regarding Bitcoin’s historical performance in the third quarter of the year, it is possible that this next big movement will favor bears.

Analytics platform Skew recently offered a chart showing the cryptocurrency’s historical quarterly performance.

Image Courtesy of Skew

As seen on the above chart, Bitcoin tends to post losses during the period between July and September, only bucking this trend in 2017, when it climbed by 81%, and in 2018, when it climbed by a mere 3%.

If this trend persists, it is likely that the crypto will see losses in the months ahead.

BTC Options Traders Expect Near-Term Weakness

Options traders do expect the cryptocurrency to see some further weakness in the near-term, but their outlook remains positive in the long-term.

This trend is clearly seen while looking towards the divergence in the cryptocurrency’s options skew – which describes the divergence in realized volatility between options contracts with different expiry dates.

“Interesting divergence in skew, cautious short-term and bullish long-term,” the analytics platform explained.

Image Courtesy of Skew

Sentiment amongst options traders is also becoming a more reliable indicator of what investors expect to happen next, as options volume has been seeing a parabolic climb in recent times.

Featured image from Shutterstock.

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