Cryptocurrency’s leading act has been knocked off the top spot. The much-hyped launch of exchange-traded funds (ETFs) for Ethereum in the United States has sent Ether (ETH) soaring more than 20% since May 20. Bitcoin’s (BTC) performance looks lackluster by comparison. Opportunities to bet on crypto’s kingpin still abound — but not all are worth taking.
If you’re an inveterate Bitcoin maxi, stop here. You already know the U.S. dollar is on the brink of collapse, and $200,000 BTC is right around the corner. For everyone else, here are three practical tips for protecting your crypto profits after this bull run loses steam.
Realize Ether ETFs may not be bullish for Bitcoin
The greenlight for Ether ETFs is bullish for crypto as a whole, but not necessarily for BTC — especially not in the short-term. With Ethereum dominating the market’s narrative in the coming months, expect BTC to retest prior price support levels.
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Rather than placing big directional bets, consider market-neutral plays. One of the more profitable strategies this year has been a relatively simple carry trade between BTC’s spot and perpetual futures markets. With Bitcoin bulls doubling down on long positions, funding rates on futures exchanges have soared north of 20%. Contrarians have been cashing in, collecting payments for shorting BTC perpetuals while offsetting risk in the spot markets.
A covered strangle involves buying out-of-the-money call and put options while holding the underlying asset. Source: Fidelity Investments
For a more sophisticated trade, investment research firm 10x Research swears by the so-called “covered strangle.” This moderately bullish bet against extreme volatility involves holding spot BTC while selling out-of-the money call and put options that will expire in December — at the $100,000 and $50,000 levels, respectively. The strategy offers a “17% downside buffer or 17% more yield, depending on where BTC closes in December,” according to 10x Research.
Skip self-custody — Put something in ETFs
Bitcoin’s laurels as a…
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