HomeNewsCrypto Drama Unfolds: BitMEX Founder Takes Bearish Stance with $35K Puts Amid...

Crypto Drama Unfolds: BitMEX Founder Takes Bearish Stance with $35K Puts Amid CME Gap

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  • Arthur Hayes, co-founder of BitMEX, has purchased $35K strike put options on Bitcoin, speculating a drop below $40K.
  • This strategic move aligns with the upcoming U.S. Treasury quarterly refunding announcement and the existing CME Gap, suggesting potential market adjustments.

Hayes’ Calculated Bet on Bitcoin’s Future

Arthur Hayes, the co-founder and former CEO of BitMEX, has made a notable move in the cryptocurrency derivatives market. By acquiring Bitcoin put options with a $35K strike, Hayes is positioning himself for a potential downturn in Bitcoin’s price. These options become profitable if Bitcoin’s value dips below $35,000 by March 29, 2024, reflecting Hayes’ bearish outlook for the near term.

Deciphering the Market’s Signals

Hayes’ strategy is influenced by several factors. Foremost among them is the impending U.S. Treasury quarterly refunding announcement, slated for January 31, 2024. This event is critical as it details the government’s borrowing and debt management plans, impacting the broader financial market, including cryptocurrencies.

Moreover, Hayes’ decision is also shaped by the presence of a CME Gap in Bitcoin’s price trajectory. A CME Gap arises when the Bitcoin futures price on the Chicago Mercantile Exchange differs from Bitcoin’s price on other platforms. This gap occurs because the CME market does not operate over weekends and holidays, while Bitcoin trading continues around the clock. The specific gap that Hayes seems to be eyeing formed in early December 2023, spanning from $40,300 to $39,700.

The Mechanics of Put Options in Play

In purchasing these put options, Hayes has secured the right to sell Bitcoin at the predetermined price of $35,000 before the expiration date, regardless of Bitcoin’s market price at that time. This financial maneuver allows him to capitalize on the difference between the market price and the strike price if Bitcoin falls below the strike price, minus the cost of the option.

Market Implications and Investor Sentiment

Hayes’ move is reflective of a broader sentiment among some investors who anticipate a downturn in Bitcoin’s price. This sentiment is further bolstered by the recent surge in Bitcoin open interest and a significant increase in derivatives volume, indicating heightened market activity and speculation.

The strategy adopted by Hayes exemplifies the intricate interplay between macroeconomic events, market structures like the CME Gap, and strategic investment decisions in the cryptocurrency market. As the market awaits the U.S. Treasury’s announcement and observes Bitcoin‘s price relative to the CME Gap, Hayes’ put options signify a keen understanding of these dynamics and a calculated bet on the future movements of Bitcoin’s price.

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John Kiguru
John Kiguru
John Kiguru is an accomplished editor with a strong affinity for all things blockchain and crypto. Leveraging his editorial expertise, he brings clarity and coherence to complex topics within the decentralized technology sphere. With a meticulous approach, John refines and enhances content, ensuring that each piece resonates with the audience. John earned his Bachelor's degree in Business, Management, Marketing, and Related Support Services from the University of Nairobi. His academic background enriches his ability to grasp and communicate intricate concepts within the blockchain and cryptocurrency space. Business Email: info@ethnews.com Phone: +49 160 92211628