Bitcoin could have additional room to rise as institutional traders unwind bearish volatility positions, potentially creating another source of buying pressure, according to Alexander Blume, founder and CEO of crypto asset manager Two Prime.
Blume said investors have consistently sold Bitcoin call options, pushing implied volatility lower while leaving those positions exposed to a stronger-than-expected move in BTC. A continued rally could force call sellers to hedge their exposure or exit their trades, potentially accelerating Bitcoin’s advance.
“There are still a meaningful number of people short,” Blume said, arguing that selling Bitcoin volatility when it is near historically low levels has been an unfavorable strategy.
Bitcoin and the broader crypto market have recovered sharply in recent weeks. BTC briefly climbed above $82,000 on Thursday, reaching its highest price since May, before trading around $78,500 at the time of publication.
The rebound initially benefited from falling bond yields, increased Treasury debt buybacks and expectations that the Federal Reserve might keep interest rates unchanged at its September meeting. Spot Bitcoin ETFs attracted $731 million in net inflows Thursday, their largest one-day inflow since January. Stronger-than-expected employment data released Friday, however, subsequently lifted expectations for a possible Fed rate increase.
Two Prime is a New York-based institutional Bitcoin asset manager and lender serving corporate treasuries, miners, family offices and other investors. Founded in 2019, the company says it has access to $3 billion in lending capacity.
Funding rates show limited speculative excess
Despite Bitcoin’s rapid recovery, perpetual futures funding rates remain below levels typically associated with excessive leverage or an approaching market top, Blume said. That suggests the rally is being supported by factors beyond speculative futures positioning.
Spot ETF demand and renewed purchases from Bitcoin treasury companies are also helping drive the market higher, he said.
Strategy and Strive have restarted Bitcoin purchases, creating a potential feedback loop: rising BTC prices can improve their ability to raise capital, allowing the companies to acquire even more Bitcoin.
Bitcoin’s implied volatility fell to about 23%-24% last month before rising into the 40% range during the latest rally, Blume said. While the increase has been substantial, volatility remains relatively moderate compared with Bitcoin’s historical levels. Further gains in volatility could therefore put additional pressure on traders who have sold calls.
$60,000 emerges as key support
Blume believes Bitcoin has formed a base near $60,000 as long as the wider economic environment remains stable.
A broad selloff in equities and other risk assets represents the biggest downside threat. “If there is a broader collapse in risk assets, bitcoin will fall as well,” he said.
Persistent inflation, elevated oil prices and high Treasury yields remain obstacles for risk assets. Still, Blume believes the market’s heavy bearish positioning could amplify Bitcoin’s upside response if incoming economic data turns even moderately favorable.
He expects the Trump administration to emphasize economic stability while pushing for lower interest rates.
Blume also highlighted proposed changes to parts of the personal consumption expenditures price index. In his view, those adjustments could result in lower reported inflation and potentially improve the outlook for monetary easing.
Miners increasingly borrow against BTC
The stronger crypto market is also supporting demand for Two Prime’s lending business, which Blume said typically grows as Bitcoin prices rise.
Meanwhile, Bitcoin miners are pursuing different strategies as they move deeper into artificial intelligence infrastructure. Cipher Mining and TeraWulf have made more aggressive shifts toward AI, while CleanSpark and MARA are attempting to preserve their Bitcoin businesses while expanding into AI and power infrastructure.
MARA sold more than 23,000 BTC during the first half of the year but recently chose to raise funds against its remaining Bitcoin instead of selling additional coins. The company secured $600 million from Coinbase and Two Prime in August.
Blume said the transaction demonstrates how major miners can unlock liquidity from their Bitcoin holdings while maintaining exposure to potential future price appreciation.
