Cryptocurrency is becoming popular around the worlds regardless of its volatility price. As the political and economical uncertainties arise, Bitcoin (BTC) is perceived as an appealing investment option since it is a scarce asset, insulated from the downward trends. On May 12, BTC value descended 12.3% in a month and started to decouple from the S&P 500 Index, which marks its 15% decrease from its all-time high. Parameters such as the US government debt ceiling crisis, the commercial real estate market crisis, and the regulatory efforts of the Securities and Exchange Commission (SEC) are some of the factors creating concerns in the cryptocurrency market.

At the same time, speculations about the upcoming Halving event, expected for April-May 2024, when the miner's incentive per block will be reduced from 6.25 BTC to 3.125 BTC are increasing investor’s confidence. The number of addresses holding 1 BTC or more increased to 1 million on May 13, according to the Glassnode analytics firm with about 190,000 added in the past months. As a result, traders are increasingly turning towards option instruments, including the risk reversal strategy, to protect themselves from unexpected price swings or from experiencing a downside when trading.

This strategy involves a combination of two option instruments and requires no initial cost, yet a margin deposit of 0.275 BTC is needed to cover negative exposure. With this, investor's benefits are unlimited gains and a capped loss, since the trade has no returns between $25,000 (down 9%) and $34,000 (up 24%) while being able to get a 0.275 BTC gain after a 36% price rise. Successful use of this strategy can result in a 0.41 BTC gain after a 42% rally to $39,000 within 45 days.

Though high returns may sound appealing, traders should understand that option trading carries greater risks than stock investing and that it is not suitable for all investors. It is recommended that investors consult with their financial advisor before acting on any investment option.



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