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Options Traders Eye $80K Amid Bitcoin Frenzy
- Bitcoin’s all-time high may just be a few days away – but derivatives traders don’t believe it will stop there.
- A large number of March expiry calls have been placed between USD $65-80K, suggesting investors are bullish on the current rally.
- Options contracts allow traders to agree to buy/sell an asset at a pre-determined price on a pre-determined date.
- Meanwhile, other key indicators including margin trading and perpetual swap funding rates are surging toward all-time highs.
Bitcoin’s new all-time high may just be the beginning, if optimistic options traders are to be believed. Amid BTC’s most impressive run in nearly three years, many among the community are awaiting a correction – or even just a slowdown. However, with the momentum pushing Bitcoin’s price higher and higher, some experienced investors believe that the coin might hit USD $80K (AUD $122K) before any reversal in trend.
Related: No Bitcoin On Exchanges Left? Analysts Weigh In
Out of the Money Calls Flowing in for $75K+
Institutional money has roared into Bitcoin ever since the approval of spot ETFs on January 11th a few months ago. Now, options contracts across several key trading platforms are starting to reflect the renewed interest. According to Luke Nolan, research associate at CoinShares:
The beginning of this week shows a resumption of bullish activity, with a lot of March expiry OTM calls clustered at 65k, 70k, and some other clusters at 75k and 80k.
Luke Nolan Options are a form of derivatives contract that lets traders buy (call) and sell (put) at a pre-determined price at some point in the future. An Out of-the Money (OTM) call occurs when the price of an asset – in this instance Bitcoin – is trading for lower than the call price.
Essentially, investors are betting that the price of BTC will surpass the call price before the options contract expires, giving them access to greater gains than if they just bought Bitcoin itself. So the swell of interest in USD $70k+ (AUD $107K) derivatives contracts suggests that serious traders strongly believe in Bitcoin’s current bull run.
According to Jamie Baeza, founder of AnB Investments, the rest of the derivatives market is running hot too.
Related: Judge Rules Crypto Assets Are Securities, Even When Traded on Exchanges
These conditions are reminiscent of some moments of late 2020 and 2021, of the bull market and extreme optimism
Jamie Baeza The statement comes on the back of margin trading hitting close to the all-time-high levels it experienced in 2021 across centralised exchanges offering leverage.
Author
Ben Knight
Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.
