The spot chart appears to have regained a sense of security, with Bitcoin rallying above $62,000 as weak US jobs numbers dampen expectations for a short-term interest rate hike by the Federal Reserve. Options desks that trade Bitcoin futures are pricing more cautiously.
The U.S. Bureau of Labor Statistics reported that payrolls grew by just 57,000 jobs in June, far below the 110,000 jobs surveyed by The Economist.
The labor force participation rate fell to 61.5%, the government cut salaries by a combined 74,000 people in April and May, and the unemployment rate remained flat at 4.2%.
While the dollar posted its biggest weekly decline since early April, data from CME Fedwatch showed there was about a 45% chance of a rate hike in September if numbers stabilized.
A weaker dollar and reduced likelihood of interest rate hikes gave crypto buyers the macro settings they were hoping for heading into the July 4th weekend.
Options traders are still hedging, with Bitcoin puts trading at a premium over call options on Deribit, with a one-week 25-delta put-call skew of nearly 16%. This is down from 25% 10 days ago, a sign that the panic is easing.
This premium indicates that hedge money is hunkered down on the sidelines, ready to redeploy if Bitcoin falls.
Lavitas data flagged a large Bitcoin options block on July 17th. This structure is a long call option condor built from long positions at $64,000 and $70,000 against short strikes at $66,000 and $68,000.
In layman’s terms, this trade is most profitable if Bitcoin goes up, but only if it stays in the $66,000 to $68,000 range by the expiration date. If you move above or below that range, your position loses value. This structure gives a visible surveillance range over the weekend and acts as a soft ceiling for how far this rebound can go before encountering resistance from others’ books.
With U.S. stock markets closed for Independence Day on July 3, the New York Stock Exchange’s calendar will see most desks closed over the long weekend, piling thin liquidity on top of already subdued option positions.
Cryptocurrencies trade 24 hours a day, regardless of holidays, and channels that typically confirm crypto movements, such as ETF volume, stock correlation, and deep futures, go silent when Wall Street leaves.
As a result, fewer traditional market checks are available in real-time, and option positioning becomes more important in indicating the next move in price.
Where the condor is rewarded
If Bitcoin sustains above $62,000 from Saturday to Sunday, thin holiday liquidity could work for you just as much as it can work against you.
This will amplify the pullback and push spots into the $66,000 to $68,000 band where call condors reside. This band is hovering around $62,100, roughly 6% to 9% above the current spot.
While a trade within this range would be in line with what the already large options money is expecting, a clean push above $68,000 in actual volume would turn that squeeze into an actual breakout and clear the ceiling built into someone’s calculations.
If we don’t meet that, a stall within the band, or a fade as the order thickens on Monday, it leaves the rebound as just a squeeze.
Where the skew is correct
A rejection near $66,000 or a new break below $60,000 would completely reverse the setup. Both moves would confirm what the put skew had been pricing in even before the jobs report.
A loss of $60,000 would bring it back to the low $57,000 level, about 8% below the current spot, a zone that Bitcoin had already tested during the Q2 pullback.
Just as stocks can accelerate their gains over the weekend, they can just as easily accelerate their declines as stop orders begin to unwind.
Bitcoin’s rally above $62,000 is real, and so is the sense of caution underneath. The weak jobs report gave the dollar a reason to weaken, giving the Fed enough reason to wait to keep its crypto bid up until the end of the week.
One large option structure forming the $66,000 to $68,000 range still remains at its lows. Regardless of how Bitcoin trades by Sunday night, the results will tell more about who hedged correctly.
