Bitcoin continues to stay strong, gaining over 2% today and hovering just below $122,000. After a small dip at the end of last month, the cryptocurrency proved its resilience by reaching new heights. A similar event happened last year when Bitcoin broke through the $72,000 mark, after nearly dropping below $50,000. It then surged by 50%, leading to questions about whether we will see similar gains this time. Market participants are diversifying their investments, moving away from dollar assets since April. Gold has also benefited from this trend, especially with growing concerns about the U.S. fiscal situation. Ethereum has risen too, trading above $3,000, as the cryptocurrency rally continues. The growth in crypto assets is part of a larger trend of increased spending and movement of money. What we’ve witnessed is a pattern familiar to many in the trading sector — Bitcoin briefly retreats, regains its strength, and then surpasses previous limits. Its climb past $122,000, despite month-end fluctuations, is like earlier surges following periods of consolidation. This pattern reminds us of the bounce from near $50,000 to the $72,000 range. The previous rally was driven not just by speculation but by a clear shift from long-term holders, fund managers, and institutions looking for alternative stores of value. Today, a similar trend is developing. As U.S. fiscal pressures come into focus and the dollar loses some appeal, interest in assets like Bitcoin and gold is growing. This time, investments are not centered on just one asset. While it’s tempting to think Bitcoin might replicate that past 50% jump, we should remain cautious. Although the technicals look promising after a steady few weeks, too much momentum above these levels could lead to short-term volatility. Current metrics indicate that investor positions are still quite reactive, which may leave some vulnerable to negative news or policy shifts. Ethereum’s rise above $3,000 adds another layer of strength to the market, showing a broader appetite for crypto assets. However, this also means that option pricing is changing. We’ve noticed shorter-term implied volatility flattening, while longer-term activity is increasing. This suggests that positions might be preparing for a larger structural adjustment, not just chasing profits. Increased digital transactions, wallet activity, and inflows into token investment schemes reveal why cash positions are increasing. This market rewards timing and, at current levels, there’s less room for error than many think. From a derivatives perspective, it’s important to examine the shifting term structure, especially where futures premiums are widening. The basis remains healthy, but tighter spreads indicate that enthusiasm for the future is meeting some skepticism. It might make sense to adjust positions to benefit from rising skew or to look for protective structures, particularly for those long into June and July. When choosing strike levels and rolling hedges, it’s crucial to be selective. Investors should not just react to price movements but consider how to protect against sudden reversals caused by macroeconomic noise. Recent jumps have made delta levels less neutral, so adjustments here may help maintain flexibility. We’re observing Wednesday’s CPI data closely, but more importantly, how the market reacts. If disinflation continues, it could strengthen confidence to take risks into the third quarter. However, jitters around interest rates persist. This market moves quickly, but past memories linger. We don’t need history to repeat itself. A small hesitation could lead to structural changes. Many remember times when over-leveraged positions at all-time highs created stress. Volatility doesn’t require a policy blunder, just a hint of doubt.

…

here to set up a live account on VT Markets now