March 27, 2024
Bitcoin News

Bitcoin Options Surge as Investors Bet on Triple-Digit Price Gains

In a striking resurgence of enthusiasm reminiscent of 2021, investors are flocking to Bitcoin (BTC) options that could pay off handsomely if the cryptocurrency’s price triples in the coming months. The market has witnessed a notable increase in animal spirits, as evidenced by the skyrocketing interest in call options, particularly the $200,000 strike price listed on Deribit.

As of Friday, the notional open interest for the $200,000 strike call option surpassed $20 million, nearly three times Bitcoin’s current market rate of $67,000. A substantial portion, $14.6 million, is locked into the call expiring on December 27, with the remainder concentrated in June and September expiry strikes, according to Deribit Metrics.

Investors purchasing the so-called deep out-of-the-money (OTM) call at the $200,000 strike expiring on December 31 are essentially betting that Bitcoin will conclude the year above this level. This move is consistent with the growing consensus that the impending halving-induced supply reduction will tip the supply-demand balance in favor of the bulls, potentially propelling prices into six figures.

The resurgence of interest in the $200,000 strike call mirrors the popularity it gained when Bitcoin last traded above $60,000 in 2021. The current surge in activity aligns with the supply-demand balance, which recently reached 1:10, fueled by Wall Street’s embrace of U.S.-based spot Bitcoin exchange-traded funds. Bitcoin has recently hit record highs above $69,000, representing a 59.7% year-to-date gain.

This rally has significantly boosted overall activity in the options market, with Deribit experiencing a record-breaking total open interest in Bitcoin options at $20.4 billion, surpassing the previous peak of $14.36 billion in October 2021. Ether’s options open interest has also surged to an all-time high of $11.66 billion.

Deep out-of-the-money calls, being more affordable than those at strikes closer to the market rate, are akin to lottery tickets. While the potential for profit is substantial if the market surpasses the strike price before expiry, the risk is limited to the premium paid for the option. The market now eagerly awaits to see if these bullish bets will pay off in the months to come.

Image by Bartek Kopała from Pixabay

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