- “Very concentrated call buying” was observed by one market watcher who was hoping to profit from a rally to between $74,000 and $80,000 by the end of this month.
- There was a lot of purchasing activity on options trading tables for BTC calls with June expiry.
- According to Matrixport, there are about $1.5 billion worth of shorts concentrated around the $72,000 level, which indicates that BTC is “ready to squeeze higher”.
According to market data, traders of Bitcoin (BTC) options are progressively positioning themselves for the currency to reach new highs this month.
In a market update on Wednesday, digital asset hedge fund QCP claimed that “our desk saw strong bullish follow-through with significant call buying for June expiries, indicating positioning in the options market for a decisive break of 74,000 all-time highs this month.”
Options are derivative contracts that grant buyers the right, prior to the contract’s expiration date, to purchase or sell an asset at a specific price.
The option will expire worthless if the underlying asset fails to reach the strike price (out of money). Buying calls indicates a bullish view on the price of an asset, whilst buying put options indicates a pessimistic view.
Through large amounts on long BTC OTM (out-of-money) call spreads in end June, and to a lesser extent end July, options activity was plainly optimistic today, institutional crypto derivatives trading network Paradigm said in a Telegram broadcast.
“Very concentrated call buying” was observed on Tuesday, according to Joshua Lim, co-founder of Arbelos Markets, the primary trading firm for cryptocurrency derivatives.
Approximately 1100 contracts representing approximately $80 million in notional demand were purchased for June 28 expiration call spreads in strikes ranging from $74,000 to $80,000.
In order to profit from a constrained price increase, a call spread is an options trading technique in which purchases of call options at a lower strike price are made in tandem with sales of the same number of calls at a higher strike price with the same expiry.
Since hitting an all-time high just below $74,000 in mid-March, Bitcoin has been consolidating for nearly three months. It had a gradual comeback after temporarily falling below $57,000 in early May, and it is currently trading at over $71,000, just a few percentage points shy of new record highs.
Bitcoin looks to be set to squeeze higher, according to a post on Wednesday on X from cryptocurrency investment services company Matrixport. This is backed by significant inflows into U.S. spot exchange-traded funds and increasing open interest in the futures market.
A spike above $72,000 would trigger a short squeeze, according to Matrixport, as there are about $1.5 billion worth of leveraged futures contracts centered around that range that are geared toward lower prices and could be liquidated, accelerating the upward trend.
Disclaimer : This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.
