BTC rebound linked to traders unwinding put option hedges, says analyst

Bitcoin's recent upward trend was triggered by options traders unwinding their put option hedge positions, according to an analysis by 10x Research CEO Markus Thielen. In a report cited by CoinDesk, Thielen explained that the rally appears to be influenced by a structural change in put options within the $55,000 to $60,000 range. He noted that during the sharp decline in February, traders had heavily purchased put options to hedge against downside risk. However, as the market stabilized, the likelihood of these options becoming in-the-money by expiration diminished, prompting traders to close out their hedge positions. This process, Thielen argued, created upward momentum. The unwinding of put options reduces selling pressure from market makers managing their risk, which can consequently lead to increased buying activity in the spot market.