The recent increase in the price of Bitcoin has caused significant fluctuations in the crypto market, especially in the options markets. Key data suggests that there may be further price appreciation.
The Bitcoin Trade That Saw A 31x Profit, Too Late To Catch the
Data from the options platform Deribit explored the current state of the options market. Two weeks ago, the platform suggested that buying call contracts would result in profits in the following weeks.
This prediction turned out to be accurate, as calls with strike prices around $28,000 have seen a 31x return in the past two weeks, driven by increased volatility. These positions could continue to appreciate in the future.
Analyst Crypto Researcher stated in the Deribit post:
The old trader saying, ‘The Bigger the Base, the Higher the Space,’ comes to mind as Bitcoin consolidated between the $20,000 to $30,000 range in the last 18 months. Historically, breakouts from this kind of consolidation have led to significant upward momentum. We advise against betting against this rally as Bitcoin may have just started gaining momentum, and the potential for prices to rise further is high.
Bitcoin Open Interest At 2021 High
In an interview with Bitcoinist, Luuk Strijers, Chief Commercial Officer (CCO) for Deribit, discussed the recent rally. Strijers believes that the price action has been influenced by events surrounding the Bitcoin Spot Exchange Traded Fund (ETF).
According to Strijers, speculation about Bitcoin ETFs has positively affected market sentiment. This has resulted in an imbalance in the options market, favoring bullish positions.
In other words, crypto investors have become more optimistic about the approval of a Bitcoin ETF and have been buying more call contracts. This increased trading activity has put upward pressure on prices.
The chart below shows that Deribit has processed over $10 billion in trading volume in the past 24 hours alone. This activity is likely to continue as volatility increases, driving the prices of call contracts even higher. Strijers stated:
Strijers also noted that the last time Deribit experienced this level of activity was during the 2021 bull run when Bitcoin reached a price of $60,000. This indicates the potential for a Bitcoin spot ETF to push prices much higher, potentially by 15% to 25%, in the short term once the approval is announced.
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