Bitcoin Covered Call Now is a Good Opportunity

Introduction

Bitcoin’s price has been volatile in recent weeks, facing critical technical levels amid shifting macroeconomic conditions. This report analyzes Bitcoin’s recent price fluctuations—particularly around the $88,000 mark and the $80,000–$90,000 range—and examines key indicators signaling the current trend. We also incorporate macroeconomic factors such as regulatory developments, institutional investment activity, and monetary policy impacts on Bitcoin. Finally, a detailed covered call strategy is recommended based on the current market scenario.

Volume Profile Analysis

The market has been posting lower highs and lower lows on the price chart, confirming a short-term downtrend. The failed attempt to sustain above $88K and subsequent drift downward indicate weakening bullish pressure. From a volume-profile perspective:

• Volume Point of Control (VPOC): The price level with the highest traded volume in the recent range lies around $96,000.
• Value Area (VA) Lower Bound: Near $94,000 (Informe Bitcoin.pdf).

Now that BTC trades below these levels, they have turned into overhead resistance on any rebound attempts. This reinforces the bearish bias, as rallies are likely to be capped by heavy selling in those high-volume price regions. Historical trading patterns also suggest that Bitcoin struggles to maintain a prolonged range in the $80–$90K zone. On prior occasions, the price moved quickly through the upper-$80Ks to low-$90Ks, spending very little time in that band (Informe Bitcoin.pdf). This implies that if BTC cannot reclaim $88K soon, it may seek a “new equilibrium” at lower price levels (potentially in the mid- or low-$70Ks) rather than oscillate within $80–$90K for long.

Macroeconomic Factors Influencing Bitcoin

• Regulatory Changes: Recent regulatory developments have had mixed impacts on Bitcoin. In the U.S., the administration under President Trump has become more crypto-friendly, establishing a Crypto Task Force and discussing plans for a national Bitcoin reserve, creating a positive institutional environment. Europe’s implementation of the MiCA framework in January 2025 further supports Bitcoin by providing regulatory clarity. However, increased global oversight and strict compliance standards from international regulators like FATF present potential market risks. Regions like China maintain restrictive crypto policies, whereas areas like Hong Kong are opening up, highlighting regulatory divergence.
• Institutional Investment Trends: Institutional activity significantly influenced Bitcoin prices, particularly in late 2024 when major firms expanded their holdings and Bitcoin ETFs made the asset more accessible, pushing Bitcoin above $100K. Recently, institutional investors have shown caution, evident from significant withdrawals from Bitcoin ETFs during recent market downturns, driving prices below $90K. Institutional involvement thus offers both stability through legitimacy and potential volatility due to large-scale movements in or out of positions.
• Economic & Monetary Policy Factors: Macroeconomic factors like global market sentiment, central bank policies, and economic conditions strongly influence Bitcoin's price. Recent declines coincided with heightened risk-off sentiment due to weak U.S. economic data and geopolitical tensions, especially U.S.-China trade conflicts. Elevated interest rates and tightened monetary policy have further pressured Bitcoin, weakening its attractiveness as a risk asset despite earlier narratives of it serving as an inflation hedge. Future market moves will likely depend heavily on economic indicators, monetary policy shifts, and global growth outlooks.

Covered Call Strategy Recommendation

Given Bitcoin's current technical downtrend and uncertain macroeconomic backdrop, implementing a covered call strategy is prudent to generate income and cushion price declines. This involves holding Bitcoin and selling call options against it—an approach that works well when the market is range-bound or slightly bearish.

• Strike Price Selection: Select strike prices around recent resistance levels or slightly above the current market price, ideally between high-$80Ks to mid-$90Ks. A strike near $90K provides premium income while setting a comfortable selling price.
• Expiration Date: Choose short-term expirations (2-6 weeks) to rapidly benefit from time decay and maintain flexibility for market adjustments. Monthly options offer a good balance of premium income and manageability.
• Premium and Potential Return: Selling calls generates immediate income, lowering the effective cost basis of your Bitcoin holdings. If Bitcoin remains below the strike price, the premium becomes profit, enhancing returns in stable or slightly declining markets.
• Upside and Downside Trade-offs: The strategy caps potential upside gains beyond the call strike price but provides premium income that slightly buffers against price declines. Although it doesn’t fully protect against significant downturns, it reduces overall loss exposure moderately.
• Optimal Conditions and Adjustments: Ideal conditions for covered calls exist with neutral to slightly bearish expectations. Investors should monitor positions closely and adjust by rolling or closing calls early if market sentiment shifts significantly.

Strategy Recommendation: Currently, selling out-of-the-money call options around $90K with a 4-6 week expiration is recommended. This strategy optimally balances income generation and moderate downside protection, aligning with Bitcoin’s expected short-term consolidation or mild downward trajectory. Investors should remain vigilant and ready to adjust this strategy if new macroeconomic developments or regulatory announcements significantly change market dynamics.

Simplified Example: Expected Payoff for Covered Call Strategy

Given Parameters:

• BTC Purchase Price: $85,000
• Call Option Sold (Strike Price): $90,000
• Option Premium Received: $2,500
• Expiration: 4 weeks

Expected Payoff Calculation:

1. If BTC ≤ $90,000 (Call Expires Worthless):
2. If BTC > $90,000 (Call Exercised):

Key Takeaways:

• Generates income in stable or slightly bearish markets.
• Reduces downside risk by lowering the cost basis.
• Caps potential upside beyond $90,000.

Conclusion

Bitcoin’s recent price action reflects a combination of technical weakness and broader macroeconomic pressures, including regulatory changes, institutional investment trends, and monetary policy shifts. While downside risks persist, a covered call strategy offers a prudent way for investors to generate income while managing short-term volatility. By strategically selecting strike prices and expirations, investors can optimize their risk-reward exposure in the current market environment. Vigilance and adaptability remain crucial as macroeconomic conditions evolve.

Disclaimer: This article is for educational purposes only and does not constitute financial advice. All investments involve risk.