Blockchain
Bitcoin (BTC) Price Rebound Pushes Gung Ho Crypto Options Traders to Reach $100,000
That of Bitcoin (BTC) The renewed price recovery has led options traders to reconsider the possibility of the cryptocurrency reaching the $100,000 level at some point this year.
The top cryptocurrency by market value rose more than 12% to $63,470 since Federal Reserve Chair Jerome Powell excluding further rate tightening or hikes as the next policy move late Wednesday, CoinDesk data shows. Friday’s disappointing US non-farm payrolls (NFP) data confirmed Powell’s stance, accelerating BTC’s rally.
Therefore, there has been a notable increase in demand for bitcoin call options on major Deribit cryptocurrency exchanges and over-the-counter (OTC) networks. These options specifically target a rally to new highs, potentially breaking above $75,000 and even reaching $100,000.
“We are seeing some bullish consequences in volatility and rates after the rebound reversal from Friday into the weekend. BTC risk reversals turned positive (calls more expensive than puts), and [there has been a] renewed demand for BTC expiring in September at $75,000 and calls at $100,000,” QCP Capital said in a note on Monday.
A call option gives the right to buy the underlying asset at a predetermined price by a specific date. A call option buyer is implicitly bullish on the market, while a put option buyer is bearish.
Institutional cryptocurrency exchange network OTC Paradigm made a similar observation on Monday, stating an increase in demand for out-of-the-money (OTM) calls or strikes well above the current market rate of BTC.
“The options market appeared to be anticipating a short-term rally this morning with the main BTC and ETH trades on Paradigm consisting of OTM calls bought in large quantities. We noted the previous March 25 [expiry] $200,000 call buyer closing his position to buy in July 2024 [expiry] $85,000 strike,” Paradigm said in a Telegram broadcast.
Deribit data shows that traders have locked up more than $688 million in $100,000 exercise call options across multiple expiries. This is the highest notional open interest among all publicly traded options.
At the time of writing, more than 150,000 call options contracts worth $9.5 billion were active on Deribit. This is more than double the open interest in put options, a sign of bullish market expectations.
Notional open interest refers to the dollar value locked in the number of active or open contracts. On Deribit, an options contract represents one BTC or one ether (ETH).
Both fundamental and technical analysts are once again united on the idea that the path of least resistance for bitcoin is on the higher side.
“Bitcoin continues to be supported by the US election cycle and ongoing deficit spending. This is why we changed our “line in the sand” from 68,300 to 62,000 in our May 3 report: the market could trade (tactically ) rising above 62,000,” 10X Research said.
Siwssblock Insights expects the dollar index (DXY) to remain defensive unless Powell’s position is challenged. A weaker DXY is usually positive for risky assets, including cryptocurrencies. The DXY fell 1.2% to 105.20 since Wednesday’s Federal Reserve meeting.
“The dollar’s weaker position will likely persist as long as economic data remains supportive of this direction and as long as Federal Reserve officials do not oppose Powell’s position. The labor market is showing signs of easing, but more aggressive voices from the Fed could still push to keep rates higher for longer, which could impact the dollar’s trajectory,” reads the latest Swissblock Insights newsletter .
Meanwhile, Elliot wave analysis by John Glover, Ledn’s chief investment officer, suggests bitcoin could rise to 92,000.
‘BTC price action continues to follow my predicted path for Wave 4, as can be seen in the chart below. While the drop to $56.5K may have completed the correction, I still expect to see a price of $52-55K before the completion of wave 4, 2/ Once the fourth wave is completed, I expect momentum to ensue of wave 5 at around $92,000,” Glover said in an email to CoinDesk.
Ralph Nelson Elliott introduced Elliot wave theory in 1938 in his book The Wave Principle. The theory assumes that asset price movements can be predicted by observing and identifying a repetitive wave pattern.
The trends develop in five waves, of which 1,3 and 5 are impulse waves, which represent the primary trend, while 2 and 4 show temporary retracements of the previous impulse waves.