Bitcoin Option Traders Point to $100K

Bitcoin’s (BTC) recent price surge has reignited optimism among options traders about the cryptocurrency potentially hitting the $100,000 mark within the year. Following a statement last Wednesday by Federal Reserve Chairman Jerome Powell, which ruled out further tightening or rate hikes, Bitcoin has experienced a notable increase, climbing over 12% to $63,470, according to CoinDesk. The rise was further bolstered by disappointing U.S. nonfarm payrolls data on Friday, aligning with Powell’s less restrictive monetary policy stance.

This resurgence has sparked a surge in the demand for Bitcoin call options, particularly on the cryptocurrency exchange Deribit and through over-the-counter (OTC) networks, with traders now targeting price levels that could exceed $75,000 and even reach $100,000. “Following the reversal bounce from Friday and into the weekend, we are seeing bullish follow-through in volatility and rates. BTC risk reversals have gone positive, making calls more expensive than puts, and there is renewed demand for BTC September expiry $75,000 and $100,000 calls,” noted QCP Capital in a recent statement.

Call options grant the holder the right to buy the underlying asset at a set price before a specified date, reflecting a bullish market sentiment, whereas put options are typically purchased with a bearish outlook.

Paradigm, an institutional cryptocurrency trading network, also observed increased demand for out-of-the-money (OTM) call options, which are priced significantly above Bitcoin’s current market rate. “This morning, the options market seemed to anticipate a short-term upward movement, with significant purchases of OTM calls for both BTC and ETH on Paradigm. Notably, the individual who bought the March 25 expiry $200,000 call has shifted to buy the July 2024 expiry at the $85,000 strike,” Paradigm reported via Telegram.

Deribit data reveals that traders have committed over $688 million in $100,000 strike call options across various maturities, representing the highest notional open interest on the platform. At the time of writing, Deribit had more than 150,000 call option contracts active, valued at approximately $9.5 billion, which is more than double the open interest in put options, indicating strong bullish sentiment in the market. Notional open interest denotes the total dollar value invested in active or open contracts, with one options contract on Deribit representing one BTC or one ether (ETH).