Is Yield Hunting Killing Bitcoin’s Bold Moves? Insider Exposes the Shocking Reason!

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The <a href="https://investment-policy.com/btc-usd/">Bitcoin</a> market remains boring. Investors chasing yields may be partly to blameMarkets

What to know:

  • Bitcoin has traded in a tight range around $70,000 since mid-February.
  • Institutional investors have been selling covered call options on their bitcoin holdings to generate extra yield, shifting significant gamma exposure to market makers.
  • Market makers’ hedging of this positive gamma seems to have mechanically suppressed price swings and driven down bitcoin volatility indices.

Bitcoin’s price hasn’t moved much in over a month, and the desire for higher returns among investors could be a contributing factor.

Since mid-February, Bitcoin has been trading around $70,000. Experts believe opposing factors are influencing its price. Demand for Bitcoin as a safe investment due to the conflict in Iran has kept the price around $65,000, while increasing U.S. Treasury yields are preventing it from rising much above $75,000.

Bitcoin’s recent price stagnation seems to be partly due to investors using call options to earn extra income from their existing bitcoin holdings.

In the first quarter, large investors have been consistently buying options contracts with higher strike prices to profit from a market that’s either falling or staying flat. This strategy shifted risk onto dealers, who then bought when prices dropped and sold when prices rose to keep their positions balanced, according to James Harris, CEO of Tesseract, a regulated digital asset manager.

Options are contracts that give you the opportunity to buy or sell Bitcoin (BTC) at a specific price on a future date. A ‘call’ option is a bet that the price of BTC will increase, while a ‘put’ option protects you if the price of BTC goes down.

Imagine paying a small amount now to hold a concert ticket. You can then buy the ticket later at the price you reserved it for, even if the price increases. Or, if you change your mind, you could sell your reservation to someone else and potentially make money. The ticket seller gets to keep the initial small fee either way.

Traders are now acting like ticket sellers by selling call options. This earns them a fee (called a premium) while also protecting the buyer if the price of Bitcoin goes up. They’re doing this with the Bitcoin they already own – a strategy known as a ‘covered call,’ which lets them earn extra income on top of their existing Bitcoin holdings.

You might be asking how this relates to trading Bitcoin. Here’s the connection: traders have been selling options contracts, known as ‘calls,’ to market makers – companies that facilitate these trades by taking the opposite position.

When traders sell these options, it puts market makers in a situation where they have to buy Bitcoin if the price goes down and sell Bitcoin if the price goes up, just to balance their risk. This often leads to the price staying within a limited range.

Investors seeking high returns are subtly affecting where money flows in the market, which helps to keep prices more stable.

This helps explain why the bitcoin volatility index, BVIV, has gone down recently. Unlike volatility measures for things like stocks, bonds, and oil, which have jumped, the BVIV has fallen by 5% to reach 56% this month.

According to Harris, market activity has artificially lowered volatility – the DVOL index has fallen about six points this week, even with current economic conditions.

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2026-03-30 09:21