Institutional Investors Forced to Cover Volatility Bets as Bitcoin Surges

Bitcoin's recent rally may have further to run as institutional investors who sold volatility bets are forced to cover their positions, according to Alexander Blume, founder and CEO of Two Prime.

In an interview with CoinDesk, Blume explained that investors have repeatedly sold bitcoin calls, suppressing implied volatility and leaving themselves exposed when prices rise sharply. Further gains could force those traders to hedge or close positions, adding fuel to the rally.

There are still a meaningful number of people short, Blume said, arguing that selling bitcoin volatility at historically low levels is a particularly poor trade.