The Hidden Reason Bitcoin Won’t Break Out: OG Options Selling, Says Bitwise

Bitcoin’s price remains stuck in a narrow, low-volatility range because long-time holders continue to sell upside options, creating structural supply that outweighs spot demand from ETFs, according to Bitwise Head of Alpha Jeff Park.

In an analysis published earlier this week, Park said this dynamic is suppressing both implied volatility and upward price momentum, leaving BTC unable to meaningfully break higher despite steady inflows into listed products.

What Happened

Park argued that while ETFs and institutional buyers are accumulating spot BTC and purchasing upside calls, those flows are “insufficient to offset the native options sell pressure” coming from early Bitcoin holders monetizing their legacy positions.

The result is a market environment where implied volatility has dropped from roughly 63% in late November to about 44%, muting directional price action.

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

IBIT’s longer-dated call skew has turned positive, meaning upside calls trade at a premium, while BTC’s own call skew remains negative, with upside options still priced cheaply relative to at-the-money volatility.

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Park attributes the gap to opposite positioning, where ETF buyers want upside exposure, while crypto-native traders continue selling it.

Why It Matters

Because OG holders write calls against existing Bitcoin inventory, Park noted that their trades introduce fresh negative delta and long gamma into dealer books, reinforcing mean-reversion and keeping BTC pinned inside tight ranges.

By contrast, IBIT call buyers force dealers into short-gamma hedging that could fuel upside, but their influence remains smaller than the supply coming from crypto-native markets.

Park pointed to Deribit’s rapidly expanding open interest, now roughly 5x the 2022 level and heavily weighted toward calls, as further evidence that the dominant flows are coming from volatility sellers rather than buyers.

With the CFTC now allowing native BTC as derivatives collateral, he expects continued growth in on-chain options activity, potentially adding more volatility-dampening supply.

Park further stated that Bitcoin is unlikely to escape its low-volatility regime until either the supply of call-selling diminishes or demand for upside exposure in IBIT and other ETFs materially increases.

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

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