The hidden reason why Bitcoin won't take off: OGs are selling options, according to Bitwise

Source: Yellow Original Title: The Hidden Reason Why Bitcoin Won’t Take Off: OGs Are Selling Call Options, According to Bitwise

Original Link: The price of Bitcoin remains stuck in a narrow, low-volatility range because long-term holders continue selling upside call options, creating a structural supply that exceeds the spot demand from ETFs, according to Bitwise’s Jeff Park, Head of Alpha.

In an analysis published earlier this week, Park noted that this dynamic is suppressing both implied volatility and the bullish price momentum, leaving BTC unable to break significantly higher despite constant inflows into traded products.

What happened

Park argued that while ETFs and institutional buyers accumulate BTC spot and buy call options on the upside, these flows are “insufficient to offset the native selling pressure from options” coming from early Bitcoin holders monetizing their historic positions.

The result is a market environment where implied volatility has fallen from around 63% at the end of November to about 44%, dampening directional price movements.

One of the clearest signs of imbalance, Park said, is the strong divergence between the options market of the BlackRock IBIT ETF and native Bitcoin options on Deribit.

The longer-dated call skew of IBIT has turned positive, meaning upside call options are trading at a premium, while Bitcoin’s own call skew remains negative, with upside options still cheap relative to at-the-money volatility.

Park attributes the gap to opposing positions, where ETF buyers seek bullish exposure, while native crypto traders continue selling it.

Why it matters

Since OGs write calls against existing Bitcoin inventory, Park pointed out that their operations introduce negative delta and long gamma in dealer books, reinforcing mean reversion and keeping BTC confined in narrow ranges.

Meanwhile, IBIT call buyers force dealers into short gamma hedges that could push prices higher, but their influence remains less than the supply coming from native crypto markets.

Park highlighted the rapid growth of open interest on Deribit, now approximately 5 times the 2022 level and heavily tilted toward calls, as further evidence that dominant flows come more from volatility sellers than buyers.

With the CFTC now allowing native BTC as collateral for derivatives, he expects continued growth in on-chain options activity, which could add more supply that dampens volatility.

Park added that it’s unlikely Bitcoin will exit its low-volatility regime until either the supply of call selling decreases or the demand for bullish exposure in IBIT and other ETFs materially increases.

Until then, he said, “Bitcoin is likely to remain a trader’s market.”