Bitcoin Bulls on the Rise: Traders Embrace Call Options as Price Nears All-Time High

Forget worries about a potential Bitcoin price dip triggered by concerns of overbought technical conditions and the possible selling-off by bankrupt crypto lender Genesis.

Traders in the crypto sphere are seizing opportunities by acquiring inexpensive out-of-the-money (OTM) bitcoin call options or bullish bets, with strikes hovering near the cryptocurrency’s all-time high of $69,000.

During the weekend, numerous call options with strikes at $65,000, $70,000, and $75,000 were exchanged on Deribit, a leading crypto options exchange worldwide in terms of volumes and open interest. Each options contract on Deribit corresponds to one BTC.

Call options grant investors the right to purchase the underlying asset at a predetermined price by a specified date, indicating a bullish sentiment from the buyers.

The surge in buying activity of calls with higher strike prices reflects a positive outlook among sophisticated market participants.

Kelly Greer, Head of Americas Sales at Galaxy, emphasized the concentration of open interest in $50k calls and noted significant flows in $50K, $60K, and $75K calls in the listed options markets from April to June maturities. Greer interpreted these flows as a sign of investors’ confidence, willing to pay a premium to establish these positions, indicating a favorable stance on bitcoin.

Furthermore, Greer drew parallels between the recent concentration of activity in OTM calls at $30,000 and $40,000 in the final quarter of 2023 and a subsequent convincing price rally through those levels.

Historically, positioning in the options market has served as a reliable predictor of forthcoming price fluctuations.

The current bullish movements echo those seen during the 2020-2021 bull market when sophisticated market participants consistently acquired calls with strikes at $80,000 and above at discounted prices.

Since early October, Bitcoin has nearly doubled to $50,000, with the surge from $38,500 over the past three weeks primarily fueled by robust ETF inflows.

While the cryptocurrency’s 14-day relative strength index (RSI), a widely used technical analysis tool, has surpassed 70, indicating overbought conditions in the bitcoin market, caution is warranted. An overbought reading may suggest a potential bearish trend reversal, indicating the market has rallied too swiftly in a short period and might pause for breath.

Alex Kuptsikevich, senior analyst at FxPro, highlighted Bitcoin’s seventh consecutive day of gains but cautioned about the slowing momentum over the weekend, coinciding with the RSI exceeding 70 on daily timeframes, which could spur short-term profit-taking.

Moreover, there’s apprehension surrounding the forced sale of $1.6 billion in bitcoin, ether, and ethereum classics by failed crypto lender Genesis. Genesis has petitioned a U.S. judge to approve the sale of the mentioned cryptocurrencies held in Grayscale’s trust products.


Disclaimer: Not Investment Advice

it’s crucial to understand that the information provided here is not to be construed as investment advice. The crypto market is dynamic and highly speculative, and decisions should be made based on thorough personal research and consideration of individual risk tolerance. Always consult with financial professionals and conduct your own due diligence before making any investment decisions. The intention of this exploration is to present insights and trends, not to provide specific investment recommendations.

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