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Bitcoin’s Bull Run Ignites: Traders Target $80,000 In High-Stakes Options Frenzy

As Bitcoin breached the $52,000 mark, a notable shift in investor sentiment has been observed, with an increased interest in call options for Bitcoin at ‘ambitious’ strike prices. This trend, primarily focusing on strikes above $60,000, signals a ‘robust’ confidence among traders in Bitcoin’s potential for further gains.

QCP Capital, a renowned crypto asset trading firm, explained this phenomenon in its latest report, emphasizing the concentrated buying activity in these high-strike call options with various expiry dates.

A Surge In High-Strike Call Options

Call options are financial contracts that give the buyer the right, but not the obligation, to buy an asset at a predetermined price within a specified timeframe.

In the context of Bitcoin, this surge in call option buying at higher strike prices suggests a bullish outlook from investors, betting on Bitcoin’s price to climb significantly higher than its current levels.

This optimism is not just a speculative bubble but is backed by substantial financial commitments, with QCP Capital highlighting close to “$10 million spent on premiums for $60,000 and $80,000” strike options alone.

According to the detailed analysis by QCP Capital, there’s been a significant uptick in the purchase of Bitcoin call options, with strike prices towering above $60,000. This activity is spread from April to December expiries, indicating a long-term bullish sentiment among investors.

Deribit, the leading crypto derivatives exchange, corroborates this trend, reporting a substantial concentration of open call options at $65,000 and higher.

The December expiry call option cluster targets a $100,000 strike price, showcasing some traders’ ultra-bullish expectations for Bitcoin’s year-end valuation.

Bitcoin (BTC) Options Open Interest By Strike Price.

The end of March sees the largest volume of Bitcoin options calls at a $60,000 strike, revealing the immediacy of some traders’ bullish outlooks. With over 1,273 contracts set for the March 29 expiry, the notional value of these bets exceeds $67 million, highlighting the significant capital being placed on these optimistic market predictions.

Bitcoin Market Sentiment And Predictions

This enthusiastic options trading activity occurs amid bullish Bitcoin price forecasts. Matt Dines, Chief Investment Officer at Build Asset Management, identifies a ‘Cup and Handle’ pattern on the Bitcoin price chart, suggesting a potential rally to $75,000.

Similarly, QCP Capital analysts see Bitcoin reaching new all-time highs, projecting a significant surge before the end of March 2024.

This collective optimism is also mirrored in the Ethereum market, where there’s a notable accumulation of call options around the $4,000 strike price for mid-year expiries, indicating a broader positive sentiment across major cryptocurrencies.

Meanwhile, Bitcoin continues to make significant moves, crossing the $52,000 threshold with a nearly 20% increase in the past week, indicating that the market’s bullish sentiment is palpable.

Bitcoin (BTC) price chart on TradingView

Featured image from Unsplash, Chart from TradingView

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Record Crypto Options Volume Expires Pre-Bitcoin ETF Deadline: Analyzing BTC And ETH Reactions

The recovery of the overall crypto market this year has spurred a surge in the digital-asset derivatives market as institutional investors seek exposure to the crypto space. 

According to a recent Bloomberg report, the deadline for US regulators to approve or reject Bitcoin (BTC) exchange-traded funds (ETFs) has prompted traditional investors to turn to crypto options and futures, leading to unprecedented trading volumes.

Crypto Options Trading Hits Record High

Before the options expiry on Friday morning, crypto options trading volume reached a new all-time high, with options worth a notional value of $11 billion, as highlighted by Bloomberg. Of this total, Bitcoin contracts accounted for $7.7 billion, while Ethereum (ETH) options represented $3.5 billion.

Despite the expiration of many options, the impact on the major cryptocurrencies has been limited.  With its strong support floor at $42,000, Bitcoin has maintained its position for a potential uptrend once bullish momentum returns and buying pressure increases. 

Over the past 24 hours, Bitcoin has traded within the same range as the previous day, at $42,200, experiencing only a 0.4% decline. Nevertheless, Bitcoin has yet to fully recover from its 3.4% drop over the past seven days.

Crypto

In contrast, ETH was hit by the expiration of options contracts. Ethereum, the second-largest cryptocurrency on the market, fell more than 2%. EHT dropped to $2,316 after hitting an annual high of $2,445 on Thursday.

However, while heightened trading activity may accompany the expiration of options, it is unlikely to impact spot market prices, according to Luuk Strijers significantly, Deribit’s chief commercial officer. 

Strijers notes that clients are rolling their positions to 2024 expiries, and additional activity is anticipated after the expiry. The focus of attention and trading activity will primarily be on the impending ETF decision, Bloomberg notes.

Surge From Traditional Asset Managers 

The cryptocurrency market has undergone a strong rally this year, with Bitcoin surging nearly 160% following a turbulent 2022 marked by industry scandals and price declines. 

The recovery has been fueled partly by the optimism surrounding the potential approval of spot Bitcoin ETFs, which would attract a broader range of investors to the asset class.

Ryan Kim, head of derivatives at digital-asset prime brokerage FalconX, highlights the growing participation from crossover macro accounts, referring to large traditional asset managers allocating a small percentage of their portfolios to cryptocurrencies and crypto-focused hedge funds.

In addition, according to Bloomberg, perpetual futures, a favored tool for leveraging crypto trades, are trading at a significant premium compared to spot prices, indicating rising demand for such products.

Overall, the surge in the cryptocurrency derivatives market, driven by options expiry and the pending decision on Bitcoin ETFs, reflects the growing interest of institutional investors in the crypto space. 

The record-breaking trading volumes and increased participation from traditional asset managers highlight the evolving landscape of digital assets. 

As the market awaits the regulatory verdict on Bitcoin ETFs, it remains to be seen how these developments will shape the future trajectory of the crypto market and its integration with traditional financial systems.

Crypto

Featured image from Shutterstock, chart from TradingView.com 

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Bitcoin Steadies At $37,000, But What Are Options Traders Doing?

Bitcoin price has been trending around $37,000 since it last broke out of the funk of the market crash. Since then, the digital asset has continued to record low momentum but bears and bulls look to remain in a tie for who will eventually move the price in their favor. While all of this is going on, bitcoin options traders have shown a clear picture of their hand, and by extension, their sentiment, as the market struggles.

Bitcoin Options Traders Are Wary

Since bitcoin options traders bet on the price of the digital asset, they have to play to volatility. Hence, when volatility is high, the traders are subject to more expensive options. Such is the nature of the game. However, at current market trends, options traders have not shown much faith in the market, indicating that the majority of these traders maintain bearish sentiment around BTC.

Related Reading | Bitcoin Inflows Suggest Institutional Investors Are Moving Back Into The Market

Bitcoin’s volatility skew is the highest it has been since May 2021, more than seven months ago. It is the difference in the prices of both put and call options and how expensive each one is for options traders. BTC’s call options have a tendency to be higher than put options but this is not always so. When this happens, the asset is more in a negative volatility skew.

Implied volatile down | Source: Arcane Research

Presently, as the volatility skew has risen to a seven-month high, the demands for puts have shot through the roof. This has flipped the historical trend of BTC put and call options as puts are now more expensive than calls. Simply put, BTC’s options traders are still bearish.

Implied Volatility Tell A Similar Story

The bitcoin implied volatility is usually derived from the option prices, which are currently very low. It helps to map out how traders are viewing an asset, especially their long-term outlook for the asset. When implied volatility is low, options prices fall. The same happens the other way around.

With implied volatility being low, it points to options traders being more bearish as they are wary of placing any directional bets in the asset. Instead, staying on the fence for the time being.

BTC settles at $37K | Source: BTCUSD on TradingView.com

For traders who are interested in being able to put in some cheap calls, the opportunity has presented itself as demand for put options has gone up. Nevertheless, options traders seem hesitant to take advantage of this opportunity.

Related Reading | Bitcoin Begins To Form A Bottom? Why $40K Is The Next Target

Bitcoin itself does not paint a particularly bullish picture on the chart. Although it has been able to dig itself out of the low $30,000s hole that the market crash left it in, it is yet to re-touch the $40,000 point. Coupled with the negative market sentiment that is prevalent, it does not look like bitcoin will be pulling upward soon. Although the reverse could very well end up being the case.

Featured image from CoinDesk, charts from Arcane Research and TradingView.com