Bitcoin’s(BTC) price may be down, but that isn’t stopping some traders from placing bullish bets. In a move seemingly at odds with the recent downtrend, the options market has seen a surge in demand for call options, particularly at strike prices well above the current market value. This suggests that some sophisticated investors are looking past the short-term slump and anticipating a significant price increase in the coming months, possibly even lasting into 2025.
According to data from leading cryptocurrency exchange Deribit, the past 24 hours have witnessed a surge in buying activity for call options expiring in December and March, specifically for strike prices between $90,000 and $100,000. This strong buying pressure is interpreted by Singapore-based trading firm QCP Capital as a sign that the market is “calling the bottom” and positioning itself for a sustained rally.
For the uninitiated, a call option grants the buyer the right, but not the obligation, to purchase an asset (in this case, Bitcoin) at a predetermined price (strike price) by a specific date (expiry). By actively buying calls, these traders are expressing a bullish sentiment, believing the price will rise above the strike price before the option expires.
While the most active call options on Deribit currently focus on June expiry contracts with strike prices between $65,000 and $70,000, the December and March options with much higher strike prices paint a more intriguing picture. This suggests that some investors are making longer-term bets, anticipating significant price appreciation even beyond the immediate future.
Further highlighting this divergence in sentiment, the call-put skew metric reveals a consistent preference for calls despite the recent price drop. This indicator reflects the difference in price between bullish call options and bearish put options. A positive skew signifies a greater willingness to pay for upside potential, which has been the case throughout the recent pullback, except for a brief period in the last seven days where there was a slight demand for downside protection (puts).
Also Read: Bitcoin Price Tumbles 100 Days After Halving: Will Weak Miners Delay The Bull Run?
This bullish outlook in the options market stands in contrast to the recent decoupling of Bitcoin(BTC)from the positive trend in the Nasdaq. Factors like long-term holders and miners offloading coins, along with uncertainty surrounding the impact of ETF inflows, are believed to be contributing to the price decline. Additionally, the recent news of the German government potentially selling a significant amount of Bitcoin further fueled the bearish sentiment.
Despite the current headwinds, the surge in call options activity suggests that some investors remain confident in Bitcoin’s(BTC)long-term prospects. Whether this bullish sentiment translates into a sustained rally towards $100,000 and beyond remains to be seen, but it certainly adds an interesting layer to the ongoing price story.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
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