Grayscale is pitching covered calls as a way for Bitcoin holders to earn yield during a range-bound market, even as Glassnode detects early signals of a bear market bottom.

The strategy means holding Bitcoin while selling someone else the right to buy it from you at a set price. In return, you receive a payment called a premium. This can provide extra income when Bitcoin’s price is moving sideways, though your profit is limited if the price suddenly rises sharply.

The combination offers a practical playbook for investors stuck between capitulation and recovery.

How Grayscale’s Covered Call Strategy Works

A covered call is an options strategy where an investor holds spot Bitcoin and sells call options against that position, collecting premiums as income.

The trade-off is simple: downside cushion in exchange for capped upside during sharp rallies.

Zach Pandl, Grayscale’s Head of Research, laid out the case in a recent analysis on earning option income within a range. The argument rests on Bitcoin finding a floor first and then drifting sideways for months.

The numbers help explain the appeal. Grayscale’s hypothetical assumes spot Bitcoin near $65,000 and 40% implied volatility for a December 2026 at-the-money call.

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Under those conditions, the strategy could deliver roughly 22% annualized returns if the price stays stable. The breakeven sits around $58,500, and the position outperforms a simple spot hold up to about $72,500.

The logic extends beyond theory. Products such as Grayscale’s Bitcoin Covered Call ETF, alongside similar income vehicles, roll call options to boost yields while preserving exposure.

In markets that move violently but go nowhere, monetizing implied volatility beats waiting. The catch matters, though: a strong rally would leave those gains on the table.

Is the Bitcoin Bear Market Finally Bottoming?

The second half of the thesis is based on on-chain data. Glassnode analyst Cryptovizart tracked the 1-2-year holder cohort, referring to investors who bought roughly between July 2024 and July 2025.

That group purchased near the cycle peak, when Bitcoin climbed toward $107,000. Facing sustained underperformance and unrealized losses, those buyers have been seeing red numbers crystallize.

The pattern carries historical weight. Bear markets rarely bottom until this cohort exhausts its selling pressure, and the data now suggests a potential inflection point.

The 30-day moving average of realized losses for these holders spiked above $75 million before reversing. According to the analyst, that cooling has often marked the clearest early signal that the heaviest distribution phase is over.

Glassnode flags $69,000 as the decisive battleground. The level aligns with the aggregate cost basis for short-term holders and with the former 2021 record highs.

Reclaiming it could fuel a recovery, while rejection would extend the sideways grind. That second scenario, ironically, is precisely where covered calls perform best.

“Bitcoin looks ready for a next leg upwards. It’s already above the daily MA’s and it’s primed for a breakout further up.Clear breakout above $65,000 would signal this move and then, $80,000 in August is on the cards,” Crypto analyst Michaël van de Poppe noted.

Risks obviously remain on the table. Options strategies carry opportunity costs during strong bull runs and real losses if prices collapse below breakeven levels.

Whether the 2026 bear market has truly found its floor remains unresolved for now. Still, the convergence of income tools and cooling capitulation gives long-term holders something to work with.

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Source: BeInCrypto