Despite Bitcoin’s 20% crash on Monday, some options traders are betting on a sustained price recovery in the coming weeks.
At $ 35,580 at press time, Bitcoin is up nearly 16% from the $ 30,305 low observed on Monday. Even so, the number one cryptocurrency by market value is still well below the weekend highs above $ 40,000.
However, some traders bought expiration options on the Deribit exchange on January 29 at strike prices of $ 52,000, $ 64,000, and $ 72,000.
A call option gives the buyer the right, but not the obligation, to buy the underlying asset on or before a specified date at a specified price. A call option is a bullish bet while a put option is a bearish bet.
According to the Swiss-based data analytics platform, a total of 4,000 contracts have been bought in the $ 52,000 strike in the past 24 hours Laevitas. The $ 64,000 and $ 72,000 strike call options have purchase volumes of $ 3,250 and $ 2,000, respectively.
In theory, buying the $ 52,000 strike call is a bet that Bitcoin would go above that level on or before January 29, making the “in the money” option.
Currently, the three contracts are out of the money (OTM), with the spot rate well below these strike prices, and are trading at 0.045 Bitcoin, 0.0260 Bitcoin and 0.0190 BTC, respectively.
The deep OTM options are relatively cheap and tend to appreciate significantly when the price rally occurs, resulting in high returns on small investments. Experienced traders with optimistic price expectations therefore often buy call options at higher exercise prices.
As such, recent purchases of call options on strikes of $ 52,000, $ 64,000, and $ 72,000 suggest bullish market sentiment. Other options market indicators make a similar call.
The put-call skews of one, three and six months, which measure put costs in relation to calls, remain anchored in negative territory. This is a sign of call options or bullish bets, which attract more demand than puts.
According to analysts, the fundamentals in the chain remain strong and the path of least resistance leads to the higher side. “Don’t leave it short term $ BTC Price action distract you. The foundations are strong, the network is healthy. Zoom out and HODL “, says Rafael Schultze-Kraft, CTO of the blockchain analysis company Glassnode, tweeted.
However, the cryptocurrency may have a hard time making a quick move to new record highs above the high of $ 41,962 hit on Saturday as the U.S. dollar index sees a rebound that weakens Bitcoin and gold’s attractiveness in the markets.
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