Bitcoin Experts Favor Call Spreads as Defined-Risk Strategy

Industry experts recommend using call spreads as a defined-risk strategy to profit from an expected price rise in Bitcoin, while capping potential losses. This involves buying the right to purchase BTC at a given price and simultaneously selling the right for someone else to buy it at a higher price.

The maximum profit is the difference between the two strike prices minus what the call spread buyer paid for the spread. The maximum loss is limited to the initial premium, according to Jean-David Pequignot, chief commercial officer at Deribit.

Pequignot notes that long call spreads allow traders to buy the cheaper wing of a skew leading toward downside puts, capturing potential post-expiry upside while maintaining defined risk ahead of Fed and inflation catalysts. He also mentions that put options remain relatively expensive.

Markus Thielken, founder of 10x Research, recommends buying BTC and selling $90,000 September calls against it. This alternative strategy brings in yield due to higher implied volatility, which lowers the risk involved.

The analyst consensus remains bullish, with BlackRock citing U.S. fiscal issues as a major tailwind for assets like BTC and gold. However, it's worth noting that since 2013, September has averaged a negative 3% return in Bitcoin prices, according to data source Coinglass.