Bitcoin’s recent surge in price has prompted crypto options traders to reconsider the possibility of the cryptocurrency hitting the $100,000 mark at some point this year.
Bitcoin (BTC), the prominent cryptocurrency, surged by more than 12%, reaching $63,470, following Federal Reserve Chairman Jerome Powell’s announcement last Wednesday that there would be no further tightening or rate hikes in the upcoming policy measures.
This decision was supported by Friday’s disappointing U.S. nonfarm payrolls (NFP) data, which validated Powell’s stance and accelerated Bitcoin’s recovery.
As a result, there has been a noticeable uptick in demand for bitcoin call options on leading cryptocurrency exchange Deribit and over-the-counter (OTC) networks. These options are specifically targeting a rally to new highs, potentially surpassing $75,000 and even reaching $100,000.
“We are witnessing bullish momentum in volatility and rates following the rebound from Friday and into the weekend. BTC risk reversals have turned positive (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 Monday statement.
A call option grants the right to purchase the underlying asset at a predetermined price on or before a specific date, implying bullish sentiment from the buyer. Conversely, a put option buyer is bearish on the market.
Paradigm, an OTC institutional cryptocurrency trading network, observed a similar trend on Monday, noting increased demand for out-of-the-money (OTM) calls, which are options with strikes well above Bitcoin’s current market rate.
According to data from Deribit, traders have accumulated over $688 million in call options with a strike price of $100,000 across various maturities, representing the highest notional open interest among all options listed on the exchange.
As of the latest data, there are over 150,000 active call option contracts worth $9.5 billion on Deribit, more than double the open interest in put options, indicating bullish market expectations.
Fundamental and technical analysts alike are converging on the idea that Bitcoin’s path of least resistance is upward.
“Bitcoin continues to benefit from the U.S. election cycle and ongoing deficit spending. This is why we’ve adjusted our ‘line in the sand’ from $68,300 to $62,000 in our May 3 report – the market could trade (tactically) bullish above $62,000,” stated 10X Research.
Swissblock Insights anticipates that the dollar index (DXY) will remain weak unless Powell’s stance is challenged. A weaker DXY typically favors risk assets, including cryptocurrencies. Since Wednesday’s Federal Reserve meeting, the DXY has declined by 1.2% to 105.20.
“The dollar is expected to remain weak as long as economic data continues to support this trend and Federal Reserve officials do not oppose Powell’s position. Although the labor market shows signs of loosening, more hawkish Fed voices could advocate for keeping rates higher for longer, potentially affecting the dollar’s trajectory,” explained the latest newsletter from Swissblock Insights.
Meanwhile, Elliot wave analysis conducted by John Glover, chief investment officer of Ledn, suggests that Bitcoin could rise to $92,000.
“The BTC price action continues to align with my expected path for Wave 4. Although the dip to $56.5k may have completed the correction, I still anticipate a price of $52-55k before Wave 4 concludes. Once the 4th wave is completed, I expect the Wave 5 push to around $92k to follow,” said Glover in an email to CoinDesk.
Ralph Nelson Elliott introduced the Elliott wave theory in 1938 in his book “The Wave Principle,” which posits that asset price movements can be predicted by identifying repetitive wave patterns. According to the theory, trends unfold in five waves, with waves 1, 3, and 5 representing the primary trend, while waves 2 and 4 indicate temporary retracements of the preceding impulse waves.
