- In their latest report, Grayscale researchers say: Bitcoin covered call strategy is an effective way to generate profits during market uncertainty.
- Amid favorable economic indicators, Bitcoin showed slight upward momentum, surging above $65,000.
- $BTC ETFs are struggling to maintain upward momentum due to volatile flows and geopolitical tensions.
On July 15, leading asset management firm Grayscale highlighted its Bitcoin covered call strategy as an effective way for investors to generate income amid uncertainty in the crypto market.
covered call turn $BTC Stagnant income
Bitcoin is currently showing signs of recovery, but we expect it to trade sideways before a full recovery. In situations like this, Grayscale says a covered call strategy allows traders to earn impressive yields while ensuring some downside protection.
Zach Pandle, Head of Grayscale Research, said in an official post: “Although there are some encouraging signs, the latest Bitcoin ($BTC) A bear market will develop. If Bitcoin price finds a durable bottom but trades sideways before recovering, a covered call strategy can provide a way to help generate income from Bitcoin volatility while managing exposure to the spot price. As a reminder, in a covered call strategy, an investor buys a spot position and sells a call option against it for a premium. ”
In a covered call strategy, a trader holds a spot position in Bitcoin and sells a call option against it. This allows traders to earn income from premiums.
In an official post, Grayscale shared a hypothetical example for the end of 2026, in which researchers assumed a Bitcoin spot price of approximately $65,000 and implied volatility of 40%. Under these conditions, the trader would generate an annualized yield of approximately 22%. You will earn more than the break-even price of $58,500.
“The option premium provides income as well as downside protection in exchange for giving up some of the upside if Bitcoin spikes. If the spot price of Bitcoin falls below the break-even price, a covered call strategy will incur a loss, but less than an outright long (equal to the call premium),” the post states.
Grayscale referred to the real world $BTC Covered call ETFs, such as the BTCC fund, use a rolling portfolio of call options to achieve similar results.
Bitcoin soars to 3-week high as inflation data cools
On July 15, Bitcoin gained momentum following the latest economic data, surpassing $65,000 for the first time in three weeks. It rose to $65,467 on Wednesday. However, the cryptocurrency could not sustain above this level. At the time of writing this, $BTC It is traded around $64,833 According to , there has been a spike of 4.13% in the past 7 days. coin market cap. This cryptocurrency has a market capitalization of approximately $1.3 trillion.
The gains came after weaker-than-expected U.S. inflation-related data were released, allaying concerns about the Federal Reserve’s immediate interest rate hikes.
According to the latest report, the consumer price index (CPI) in June fell by 0.4% month-on-month, the largest decline since April 2020. This figure brought the annual inflation rate down to 3.5%. This is much lower than many analysts expected.
Separately, the Producer Price Index (PPI) also faced a decline, falling by 0.3% on a monthly basis.
Despite a small rally over the past few days, Bitcoin still struggles to generate a breakout with strong upward momentum. The reason behind this is fluctuations in demand. $BTC Institutional ETF. July 14th US spot $BTC The ETF recorded net inflows of approximately $181 million, according to Pharcyde. However, on July 13, it recorded an outflow of $424.7 million.
US spot since the beginning of the year $BTC Cumulative net inflows into ETFs have surged to more than $636,000, exceeding $51 billion. $BTC Locked in to ETF.
The overall cryptocurrency market continues to face extreme volatility due to rising global tensions in the Middle East due to the war between the US and Iran. This week, Iran launched new missile and drone attacks against Middle Eastern countries, including the UAE. Kuwait, Bahrain, and Oman responded to the U.S. attack. The attack has once again thrown the financial world into turmoil as it has the potential to disrupt global energy supplies.
