Matrixport Research: Effectively Using Options for BTC Risk Management

The changes in global liquidity are significant, and BTC may enter a consolidation phase. There is evidence that liquidity trends typically influence BTC's price movements about 13 weeks in advance.

The Hawkish Tone of the FOMC Meeting May Suppress BTC's Upward Trend

Since the FOMC meeting in December 2024, the inflow of funds into BTC ETFs has stabilized, maintaining a record peak of $35.9 billion. However, as the Federal Reserve becomes increasingly hawkish, risk capital may hesitate to further invest in these ETFs until monetary policy becomes clearer. Although the market initially dismissed the hawkish tone of the December FOMC meeting, an analysis of BTC's historical performance suggests that such hawkish statements may limit BTC's rise until the Fed signals a shift to a more dovish stance.

While many attribute the rise in BTC prices in 2024 to the launch of ETFs, it may be more closely related to changes in the Fed's policy. The rise in 2024 began at the end of January when Fed Chair Powell adopted a more dovish attitude. This coincided with BTC's upward momentum, but at the March FOMC meeting, Powell's stance on when the Fed would start cutting rates became less clear, and this uncertainty may have led to the subsequent six months of consolidation, making the next steps heavily reliant on the Fed's dovish shift in September.

Although Trump's policy stance has contributed to the rise of cryptocurrencies, it does not rule out the possibility that the Fed's hawkish stance may limit the upside potential. Currently, the market's downside risk appears limited, but proactive risk management can help mitigate risks.

Low Implied Volatility: Proper Use of Options Can Maintain Market Exposure While Managing Risk

Currently, due to low implied volatility, options present an attractive opportunity. Call options are relatively inexpensive, allowing traders to capitalize on potential upward movements. Alternatively, traders can use put options to protect substantial BTC profits at a low cost. Given the current uncertain outlook, utilizing options is a prudent way for traders to manage risk while maintaining exposure to market volatility.

The above opinions are derived from Matrix on Target. Contact us for the complete report from Matrix on Target.

Disclaimer: The market carries risks, and investment should be approached with caution. This article does not constitute investment advice. Trading in digital assets may involve significant risks and volatility. Investment decisions should be made after careful consideration of personal circumstances and consultation with financial professionals. Matrixport is not responsible for any investment decisions made based on the information provided herein.