Cryptocurrencies have made a strong comeback in August after a slow down in July. The news that private assets can now be included in 401(k) plans has boosted interest. Bitcoin has risen above $120,000, and Ethereum has surpassed $4,000. For Ethereum, hitting $4,000 is a significant achievement since it had previously been a barrier for its price. This recent rise indicates even more potential for price gains. The focus has shifted to how high prices might go, rather than if they can reach old highs. This summer is different than usual, as there has been heavy buying of risky assets, against the typical trend of less activity during this time. This year has turned the summer into one full of crypto and collectible excitement. Ethereum staying above $4,000 shows a strong upward trend. Traders in derivatives might want to keep or start long positions in futures contracts to take advantage of this momentum. The news about 401(k) plans gives a solid reason for the recent activity, suggesting new investment flows that we haven’t seen before. As buying spikes, implied volatility is rising, making call options more expensive. The Crypto Volatility Index (CVI) has gone above 90, a level that usually indicates excitement but also high costs. A smarter approach could be selling cash-secured puts or using bull put spreads to benefit from these high premiums while staying optimistic. This surge isn’t just retail investor enthusiasm; institutions are heavily involved too, confirming the trend. Open interest in CME Bitcoin futures recently broke a record of $25 billion. This level of large player involvement suggests they expect prices to go up in the coming weeks and months. The options market suggests a big upward move is coming, with a strong emphasis on gains. The 25-delta skew for Bitcoin and Ethereum options is highly positive, meaning traders are paying a lot more for call options compared to puts. This shows a widespread belief that the market is likely to rise. We saw something similar back in late 2020 when institutional news started moving the market, leading to a huge rally in 2021. While trends can be beneficial, it’s smart to use trailing stops on futures positions to safeguard profits. Taking some profits from long call positions can also help manage risk if the market changes quickly.

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