Bitcoin Whales’ Covered Calls May Dampen Price Rally Despite ETF Demand

• Whales’ covered calls create net downward pressure on Bitcoin prices by adding negative delta to the market without new liquidity.

• Market makers buying these calls must hedge exposure, leading to spot BTC sales that dampen rallies.

• 24.4% of traders anticipate a Federal Reserve rate cut in January 2025, potentially boosting BTC as liquidity increases, according to CME Group’s FedWatch tool.

Discover how Bitcoin whales selling covered calls are suppressing prices amid ETF inflows. Explore impacts and forecasts for 2025 in this analysis—stay informed on BTC market dynamics today.

What Are Covered Calls and How Do They Impact Bitcoin Prices?

Covered calls involve selling call options on Bitcoin holdings that the seller already owns, allowing them to collect premiums while potentially obligating them to sell the asset at a set price if exercised. In the Bitcoin market, long-term whales employing this strategy are exerting downward pressure on spot prices, even as demand from spot Bitcoin exchange-traded funds (ETFs) remains robust. This dynamic highlights the influence of derivatives trading on underlying asset prices, where options activity can override direct buying interest.

Long-term Bitcoin holders, often referred to as whales or original gangsters (OGs), have been actively selling these covered calls to generate income from their dormant stacks. According to market analyst Jeff Park, this approach introduces disproportionate sell-side pressure because market makers, who purchase these calls, hedge their positions by selling spot Bitcoin. As a result, despite investors in traditional ETFs paying premiums to accumulate BTC exposure, the overall price fails to rally significantly.

The Bitcoin used in these covered call strategies typically consists of holdings accumulated over many years, representing no fresh demand or liquidity influx. Park explains that selling calls against such long-held inventory adds only negative delta to the market, effectively positioning whales as net sellers. This mechanism ensures that short-term profit extraction from options premiums contributes to price suppression rather than appreciation.

How Do Market Makers’ Hedging Strategies Affect Bitcoin’s Spot Price?

Market makers play a crucial role in options liquidity by buying covered calls from whales, but they must manage their risk through hedging. This involves selling spot Bitcoin to offset potential obligations if the options are exercised, directly impacting the spot market’s supply dynamics. Supporting data from options trading platforms shows that such hedging activities have led to consistent sell pressure, keeping Bitcoin’s price range-bound around the $90,000 level in late 2025.

Jeff Park notes that the lack of new liquidity from these transactions means the strategy acts as a pure downward force. For instance, volatility skews in BlackRock’s IBIT ETF compared to native Bitcoin options reveal discrepancies in market expectations, with ETF investors seeking long exposure while derivatives introduce counterbalancing sales. Statistics from derivatives exchanges indicate that covered call volumes from long-term holders have risen notably in 2025, correlating with muted price action despite ETF inflows exceeding billions in assets under management.

Expert analysis underscores that this interplay between spot and options markets creates choppy price movements. As whales continue to prioritize premium collection over outright sales, the options market effectively steers Bitcoin’s trajectory. Park emphasizes: “When you already have the Bitcoin inventory that you’ve had for 10-plus years that you sell calls against it, it is only the call selling that is adding fresh delta to the market — and that direction is negative — you are a net seller of delta when you sell calls.” This insight demonstrates the sophisticated ways institutional and whale behaviors influence cryptocurrency pricing.

Broader market context reveals that Bitcoin’s price suppression persists amid strong fundamentals. Spot ETF approvals have drawn traditional investors, yet the derivatives layer complicates the narrative. Data from on-chain analytics firms shows whale dormant supply levels remain high, with many opting for yield-generating strategies like covered calls over liquidation.

Frequently Asked Questions

Why Are Long-Term Bitcoin Whales Selling Covered Calls in 2025?

Long-term Bitcoin whales sell covered calls to earn premiums on their holdings without fully parting with the asset, providing income in a volatile market. This strategy suits holders with 10-plus years of accumulation, as it allows profit extraction while retaining upside potential if prices stay below strike levels, based on observations from market analysts like Jeff Park.

What Will Happen to Bitcoin Prices If the Federal Reserve Cuts Rates in January 2025?

If the Federal Reserve implements another rate cut in January 2025, Bitcoin prices could see renewed upward momentum as increased liquidity supports risk assets. According to CME Group’s FedWatch tool, 24.4% of traders expect this move, which historically correlates with BTC rallies by encouraging investment in high-growth opportunities like cryptocurrencies.

Key Takeaways

• Covered calls by whales suppress prices: Long-held BTC used in these strategies adds sell pressure without new buying, countering ETF demand.
• Market makers’ hedging amplifies the effect: By selling spot BTC to balance options exposure, they contribute to choppy, range-bound trading in 2025.
• Rate cuts could spark recovery: Anticipated Fed actions may inject liquidity, potentially decoupling BTC from current suppression and driving it toward new highs.

Conclusion

In summary, Bitcoin covered calls sold by long-term whales are key to understanding the current price suppression despite robust ETF inflows, as hedging by market makers introduces consistent downward pressure. This options-driven dynamic has kept Bitcoin hovering near $90,000 in late 2025, even as it decouples from surging stock markets. Looking ahead, potential Federal Reserve rate cuts could alter this balance by boosting liquidity for risk assets, offering a pathway for BTC to resume its rally and rewarding patient investors in the evolving crypto landscape.

Bitcoin Decouples from Stocks as Analysts Gauge Future Price Directions

Bitcoin’s correlation with tech stocks, often cited by analysts, has weakened in the second half of 2025, with equities reaching new peaks while BTC retreated to approximately $90,000. This divergence underscores shifting investor sentiments, where macroeconomic factors like interest rates now play a more prominent role in cryptocurrency valuation.

Several market experts predict that Bitcoin will regain bullish momentum once the United States Federal Reserve advances its rate-cutting cycle, flooding the system with liquidity—a proven catalyst for risk-on investments. The CME Group’s FedWatch tool indicates that 24.4% of traders foresee an additional cut at the January Federal Open Market Committee meeting, which could enhance BTC’s appeal amid broader economic easing.

However, contrasting views from other analysts suggest caution, with projections of a possible decline to $76,000 and assertions that Bitcoin’s bull market may have concluded. These perspectives stem from technical indicators showing overbought conditions and sustained options-related pressure. On-chain data supports the decoupling narrative, revealing reduced inflows to exchanges and increased whale activity in yield strategies rather than spot accumulation.

The interplay of these factors highlights Bitcoin’s maturation as an asset class, influenced not just by retail hype but by institutional derivatives and global policy. As 2025 progresses, monitoring Federal Reserve decisions and whale behaviors will be essential for forecasting price trajectories. This environment rewards informed participants who navigate the nuances of spot-demand versus options-induced suppression.

Historical patterns from previous rate-cut cycles, such as those in 2020, demonstrate how liquidity injections have propelled Bitcoin to significant gains, often decoupling it further from traditional markets during recovery phases. Current metrics from analytics platforms like Glassnode indicate that while short-term traders achieved profitability in 66% of 2025, long-term holders maintain conviction through income-generating tactics. This resilience amid volatility positions Bitcoin for potential outperformance if macroeconomic tailwinds align.

Overall, the suppression via covered calls serves as a temporary headwind, but underlying adoption trends—from ETF growth to institutional hedging—signal a structurally positive outlook. Investors should focus on these fundamentals to contextualize near-term choppiness against longer-term potential.