Bitcoin Rebound Has Crypto Options Traders Anticipating $100K

The primary digital currency by market capitalization has surged by more than 12% to hit $63,470 following Federal Reserve Chairman Jerome Powell’s declaration last Wednesday that no further tightening or interest rate hikes are imminly on the table, according to CoinDesk figures. The dismal U.S. nonfarm payrolls (NFP) report released on Friday backed up Powell’s viewpoint, fueling a rebound in Bitcoin.

Recently, there’s been a significant surge in the request for Bitcoin call options on Deribit exchange and OTC markets. These options aim for price jumps, with targets set at new peaks possibly exceeding $75,000 and even touching $100,000.

In simpler terms, after the price bounce back from last Friday and over the weekend, there’s been a surge in optimism among investors in the volatility and interest rates market. Additionally, Bitcoin options for September expiry with prices set at $75,000 and $100,000 have gained significant popularity. According to QCP Capital’s analysis, calls (options to buy) are now more expensive than puts (options to sell), indicating increased demand for potential price increases in Bitcoin.

As a crypto investor, I can explain that a call option represents the ability to buy a particular cryptocurrency or digital asset at a specified price, also known as the strike price, before a given expiration date. By purchasing a call option, I am expressing my belief that the value of the underlying asset will increase and surpass the strike price prior to the expiration date. Conversely, someone who buys a put option is betting that the asset’s value will decrease, as they have the right to sell it at the specified strike price before the expiration date.

As a researcher studying the trends in the institutional crypto trading market, I have noticed a significant surge in demand for out-of-the-money (OTM) call options in the Paradigm OTC trading network on Monday. These calls refer to contracts with strike prices set well above Bitcoin’s current market rate.

According to Deribit’s data, the open interest for call options with a strike price of $100,000 and various expirations reaches approximately $688 million. This is the greatest notional amount among all available options on the exchange.

At present, over 150,000 call option agreements with a total value of approximately $9.5 billion were in effect on Deribit. This figure is greater than twice the number of active put option contracts, implying a strong sense of optimism among traders regarding the market’s future direction.

As a analyst, I’ve observed that both fundamental and technical perspectives converge on the belief that Bitcoin’s trajectory is upward.

Bitcoin’s value remains bolstered by the U.S. election cycle and persistent deficit spending. As a result, our previous threshold of $68,300 in our May 3 report has been revised downward to $62,000. The market could potentially exhibit bullish behavior if it surpasses this new level. (Source: 10X Research)

Siwssblock Insights predicts that the dollar index (DXY) will likely maintain a cautious position unless Powell’s stance is questioned. A decrease in the DXY tends to benefit riskier assets such as cryptocurrencies. The DXY has dropped by 1.2% to reach 105.20 since the Federal Reserve meeting on Wednesday.

As a researcher studying currency markets, I would interpret the current situation as follows: The dollar’s position is expected to remain weak given the ongoing supportive economic data and the Fed officials not contradicting Chairman Powell’s stance. However, if more hawkish voices within the Federal Reserve emerge, advocating for higher interest rates for an extended period, this could potentially alter the dollar’s trend. The labor market indicators suggest a certain level of loosening, but it remains to be seen whether these voices will indeed materialize and impact the dollar’s trajectory accordingly.

According to John Glover, the chief investment officer at Ledn, his Elliott Wave analysis indicates a potential increase in Bitcoin’s price up to $92,000.

As a researcher following Bitcoin’s price action closely, I’ve been observing its trajectory and believe it aligns with my anticipated progression for Wave 4, as illustrated in the chart below. Although the recent dip to around $56,500 might have concluded the correction, I anticipate a further decline towards the range of $52-55k before Wave 4 reaches completion. Post that, once the 4th wave has been established, I expect the subsequent Wave 5 push to approximately $92,000 will take effect.

In 1938, Ralph Nelson Elliott presented the Elliott Wave Theory in his publication, “The Wave Principle.” This concept posits that financial markets exhibit cyclical patterns in asset pricing. By analyzing these recurring waves, price movements can be forecasted.

Five distinct patterns, referred to as waves, make up a trend. Impulse waves, numbered 1, 3, and 5, signify the main direction of the trend, while waves 2 and 4 represent brief pauses or corrections before the trend resumes its primary course.