Options investors are heavily betting on Bitcoin rising to $80,000! They are optimistic about "these two major events" as catalysts
Analysts indicate that Bitcoin options traders are increasingly focusing on call options expiring in November with strike prices above $80,000. The market is anticipating two major events next month: first, the U.S. presidential election on November 5, and second, the Federal Reserve's (Fed) interest rate decision on November 8.
André Dragosch, Head of Research for Bitwise Europe, stated, "The highest open interest for Bitcoin options is currently for those expiring on November 8, coinciding with the day of the Fed's FOMC meeting and a few days after the U.S. election, and they are clearly skewed towards call options."
This supports the hypothesis that Bitcoin options traders are generally positioning for bullish outcomes. Call options are viewed as bullish because they allow traders to buy Bitcoin at a specific price before the set expiration date. If traders believe the price of Bitcoin will rise, purchasing call options enables them to acquire the right to buy Bitcoin at the current lower price, profiting from the difference when they buy at a higher price later.
The market widely expects the Fed to announce a 25 basis point rate cut during the meeting on November 8. According to the CME's FedWatch tool, the probability of a 25 basis point cut is currently at 90.2%. A rate cut would increase market risk appetite, and traders appear to be positioning to buy cryptocurrencies as well.
André Dragosch noted, "Options traders clearly anticipate increased volatility for Bitcoin during the Fed's FOMC decision-making, as evidenced by the implied volatility term structure of the options expiring at that time."
According to data from Deribit, there is a significant concentration of call contracts expiring on November 29, with over 3,100 open contracts at strike prices between $80,000 and $82,000, representing a nominal value exceeding $212 million. In comparison, there are only about 1,200 put contracts, significantly fewer, with a nominal value of $82 million. This highlights a bullish sentiment for Bitcoin's performance in November.
Despite the bullish outlook for Bitcoin prices at the end of November, some traders are taking hedging positions, as recent data shows an increase in open put contracts. André Dragosch remarked that the recent rise in open put contracts indicates some hedging behavior in the market.
On the 21st, Bitcoin prices briefly reached $69,400 but have since retraced to around $67,585, still unable to break through the $70,000 barrier. Despite Bitcoin spot ETFs having achieved over $20 billion in net inflows in just 10 months since their launch—a milestone that took gold ETFs five years to reach.
According to data from Farside Investors, Bitcoin spot ETFs experienced a decline of $273 million in inflows last week after seeing a consecutive five-day influx, averaging $420 million per day. BRN analyst Valentin Fournier stated:
"While institutional support remains strong, the slowdown in inflows indicates that if funds do not begin to return to the market in the coming days, momentum may weaken further."
Valentin Fournier also noted that technical indicators show that momentum is slowing, suggesting that Bitcoin may consolidate at current levels before making further upward movements. He said:
"As Bitcoin consolidates above $68,000, we may enter a quieter phase with lower volatility... However, we remain optimistic about medium-term bullish momentum and do not expect a reversal."
Disclaimer: This article is intended to provide market information, and all content and opinions are for reference only. It does not constitute investment advice and does not represent the views and positions of the Blockchain Observer. Investors should make their own decisions and trades, and the author and Blockchain Observer will not be responsible for any direct or indirect losses resulting from investors' trading.
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2024/11/4
