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Bitcoin’s $BTC$78,356.11 rebound may have further to run as institutional investors caught on the wrong side of volatility trades are forced to cover their positions founder and CEO of crypto asset manager Two Prime
Investors have repeatedly sold bitcoin calls, suppressing implied volatility and leaving themselves exposed when prices rise sharply, Blume told CoinDesk in an interview. Further gains could force those traders to hedge or close positions, adding fuel to the rally.
“There are still a meaningful number of people short,” Blume said, arguing that selling bitcoin volatility at historically low levels is a particularly poor trade.
Bitcoin and the wider crypto market have rebounded in recent weeks, with $BTC briefly topping $82,000 on Thursday, its highest level since May. The world’s largest cryptocurrency was trading around $78,500 at publication time.
The crypto’s recovery was initially fueled by easing bond yields, expanded Treasury debt buybacks and hopes the Federal Reserve could hold rates steady in September. Spot bitcoin exchange-traded funds (ETFs) also drew $731 million on Thursday, their biggest one-day inflow since January, though stronger-than-expected jobs data on Friday subsequently increased expectations of a rate hike
Two Prime is a New York-based institutional bitcoin asset manager and lender serving corporate treasuries, miners, family offices and other investors. Founded in 2019, it says it has access to $3 billion of lending capacity.
Funding rates point to a healthier rally
Despite the rapid advance, perpetual-futures funding rates have not reached levels that would typically signal excessive leverage or a local market top, Blume said, suggesting the rally is not primarily driven by speculative positioning.
Demand is also being supported by spot ETF inflows and renewed buying from bitcoin treasury companies, he said.
Strategy MSTR$138.98·At close and Strive have resumed purchases, creating a cycle in which rising prices improve companies’ ability to raise capital and buy more bitcoin.
Implied volatility fell to roughly 23%-24% last month before climbing into the 40s during the rally that remains modest by bitcoin’s historical standards and leaves call sellers vulnerable if volatility rises further
The $60,000 floor
Blume said bitcoin appears to have established a base around $60,000, provided broader economic conditions remain stable.
The biggest threat is a sharp selloff across equities and other risk assets. “If there is a broader collapse in risk assets, bitcoin will fall as well,” he said.
Elevated Treasury yields, oil prices and stubborn inflation remain headwinds. Still, Blume said widespread bearish sentiment means even modestly favorable economic news could have an outsized market impact.
Source: cryptonews.net