“Purchase spreads remain attractive for anyone who wants exposure to the recovery in the post-quarter reset. And now they are looking even better in terms of relative volatility, as long bid spreads are buying the cheaper wing of a bias that leans the other way,” he said.
There are a number of factors that could increase volatility in the short term. For example, Friday’s options expiration, which Péquignot described as “traditionally one of the most important liquidity events on the annual calendar.”
Additionally, ahead of expiration, options traders who bought puts or bearish bets in recent months are making profits. That is, they are in the money, while those who bought calls will see their bets expire worthless.
“With a spot of 64,000, the June 26 book is net long in-the-money calls and long out-of-the-money calls; the implied loss is in the hands of call buyers who chased strikes above 80,000,” Péquignot noted.
The sharp decline in shares of Alphabet (GOOG) and SpaceX (SPCX), and declines in Asian stock indices is another factor that could stoke volatility in bitcoin, which often follows the lead of technology stocks.
Not forgetting that the Federal Reserve’s preferred measure of inflation, the core PCE, will be published on Thursday and is expected to show price pressures at their highest level since May 2024. Such a reading can generate volatility in all assets, including Treasuries and cryptocurrencies. Stay alert!
