Bitcoin Options Data Shows Whale Betting Big – $50K BTC Coming In January?
Bitcoin (BTC) options open interest reached an unprecedented level, rising to $20.5 billion on December 7. This shows the active participation of institutional investors in the cryptocurrency space. Unlike futures contracts, BTC options have fixed expiration times, providing valuable insights into traders' expectations and market sentiment.
Derbit stands at the forefront of the Bitcoin options market, boasting a 90% market share. The exchange currently has $2.05 billion in open interest for options expiring on January 26. However, most of these bets may lose value as the deadline approaches.
However, as the spot exchange-traded fund (ETF) gets regulatory approval, bullish bets that were previously sidelined are entering the playing field.
How expensive is a Bitcoin call (buy) option?
A $54,000 call option that expires on January 26 is currently trading for 0.02 BTC or $880 at the current market price. This option requires a 25% increase in the price of Bitcoin over the next 49 days for the buyer to make a profit. Sellers can hedge their positions using BTC futures while pocketing the options premium.
Analysts emphasized the importance of the $250 million in open interest arising from $50,000 of call options on Deribit. At the current price of $44,000, these options are valued at a total of $8.8 million. If regulatory authorities green-light ETF schemes, this valuation could lead to significant growth. However, it is uncertain whether buyers of these $50,000 call options intend to employ them for bullish strategies.
Relatively modest demand for call options in the $70,000 to $80,000 range, with open interest of less than 20%, indicates a lack of excitement among the bulls. With an exposure of $285 million, these options are currently worth only $1.2 million. By comparison, open interest on the $60,000 and $65,000 call options expiring on December 29 is $250 million.
Turning to the put options, traders seem to be positioning themselves cautiously for the end of January, with 97% betting at $42,000 or below. Unless the current price trend changes, the $568 million in open demand options may face bad prospects. Nevertheless, selling put options can provide traders with a way to gain positive exposure to Bitcoin above certain price levels, although the actual impact is challenging.
Related: SEC discussing ‘key technical details' with spot crypto ETF applicants – report
Bitcoin options should not be rejected – yet
Open interest on Jan. 26 is 2.6 times greater than options on Deribit, indicating greater interest from neutral to bullish strategies. While $50,000 call options are undeniably attractive and have the potential to drive Bitcoin's price higher, it's important to remember that the expiration price is set for January 26 at 8:00 AM UTC, making it too early to invest. At this stage.
For Bitcoin bears, the best scenario is that the ETF proposal is being rejected. However, the United States Securities and Exchange Commission may require more time to reach a final decision, especially considering recent amendments to many filings. Currently, industry experts, including top ETF analysts at Bloomberg, estimate a 90% chance of approval by 2024, a forecast that extends beyond January.
With 49 days to go until January 26th, premature dismissal of 97% of put options seems unfair. Additionally, the bears have the regulatory landscape on their side, as a trial involving Binance and its founder, Changzheng Zhao, has just begun.
This article is not intended for general information purposes and should not be construed as legal or investment advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
