Grayscale Sees 22% Bitcoin Yield From Covered Calls

Grayscale is pitching covered calls as an income strategy for Bitcoin in a sideways market, while Glassnode sees signs the bear market may be nearing a bottom.

Key Takeaways

• Grayscale says Bitcoin holders can use covered calls to generate extra income when the market is mostly moving sideways.
• In an example using a $65,000 spot price and 40% implied volatility, Grayscale estimates roughly a 22% annualized return.
• Glassnode sees early signs that the bear market may be forming a bottom, while institutional demand for Bitcoin options is rising.

Grayscale is making the case for covered calls as a way for Bitcoin holders to earn income while the market trades mostly sideways. At the same time, Glassnode says there are early signs that the bear market may be close to a bottom. Put together, the two views help explain why Bitcoin income strategies are getting fresh attention, not just as a defensive move, but as another option for investors waiting out a choppy crypto market.

How the Strategy Works

A covered call starts with an investor holding spot Bitcoin and selling call options against that position. In return, the investor collects a premium, which can add income as long as Bitcoin stays inside a certain range. The downside is straightforward: if the price surges, the upside is capped.

Grayscale's head of research, Zach Pandl, said the strategy makes sense in a market where Bitcoin may first find a floor and then spend months moving sideways. In Grayscale's example, the firm uses a spot price of about $65,000 (€56,700) and 40% implied volatility for an at-the-money call expiring in December 2026. Based on those assumptions, the strategy could produce about a 22% annualized return if the price remains stable.

The numbers also show the tradeoff. The breakeven point is around $58,500 (€51,000), and the position beats simple spot ownership up to roughly $72,500 (€63,200). That can be appealing for investors who expect a quiet market, but it also means giving up some upside if Bitcoin breaks into a strong rally.

More Institutional Demand for Options

The timing matters here. Over the past few years, the Bitcoin options market has grown deeper, with more liquidity and richer premiums, which has made covered calls more workable. The introduction of three-week expirations on IBIT options in January 2026 also gave investors more room to roll the strategy more often.

BlackRock's launch of the iShares Bitcoin Premium Income ETF in June 2026 adds to that trend. The fund is aiming for an annual yield of 15% to 25% and shows that major firms are treating this corner of the market as more than a niche trade. It also reinforces the idea that Bitcoin is increasingly being used not only as a directional bet, but as a source of options income.

Why This Matters Now

For European crypto investors, the shift is especially relevant because the market appears to be moving further away from pure price speculation and toward structured Bitcoin products. Those products can look attractive when implied volatility is high, but they also come with a clear cost: you have to accept the upside you give away.

Glassnode's on-chain analysis fits into that broader picture. The 1-2-year holder cohort, meaning investors who roughly bought between July 2024 and July 2025, first saw heavy unrealized losses and then a narrowing of realized losses. According to the analyst, that pattern is often an early sign that the worst of the distribution phase is over, although $69,000 (€60,200) is still the key level the market needs to reclaim, Glassnode said.

That leaves the current setup in an interesting spot. If Bitcoin keeps drifting sideways, covered calls can work fairly well. If the price stages a convincing rebound, the tradeoff changes quickly. For now, the combination of option income and easing capitulation suggests a market that is still trying to find direction.

Bitcoin options are also shifting toward higher strikes in the market itself. The $70,000 call is now the new favorite, which suggests traders are already putting a clear ceiling on the upside.