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Bitcoin options data highlights traders’ belief in further BTC price upside

Bitcoin options data highlights traders’ belief in further BTC price upside

The recent gains are a rare sight in 2023, even considering Bitcoin’s impressive 108% year-to-date performance. Notably, the last instance of such price action occurred on March 14 when Bitcoin surged from $20,750 to $26,000 in just two days, marking a 25.2% price increase.

Deribit BTC options daily volume, in BTC. Source: Deribit

It’s worth noting the significance of the fact that a staggering 208,000 contracts changed hands in a mere two days. To put this into perspective, the prior peak, which occurred on August 18, saw a total of 132,000 contracts exchanged, but that was during a period when Bitcoin’s price plummeted by 10.7% from $29,090 to $25,980 in just two days. Interestingly, Bitcoin’s options open interest, which measures outstanding contracts for every expiry, reached its highest level in over 12 months on Oct. 26.

This surge in activity has led some analysts to emphasize the potential “gamma squeeze” risk. This theoretical analysis seeks to capture the need for option market makers to cover their risk based on their likely exposure.

According to estimates from Galaxy Research and Amberdata, BTC options market makers may need to cover $40 million for every 2% positive move in Bitcoin’s spot price. While this number may seem substantial, it pales in comparison to Bitcoin’s staggering daily adjusted volume of $7.8 billion.

Another aspect to consider when assessing Bitcoin options volume and total open interest is whether these instruments have primarily been used for hedging purposes or neutral-to-bullish strategies. To address this ambiguity, one should closely monitor the demand difference between call (buy) and put (sell) options.

Bitcoin options put-to-call volume ratio. Source:

Notably, the period from Oct. 16 to Oct. 26 saw a predominance of neutral-to-bullish call options, with the ratio consistently remaining below 1. Consequently, the excessive volume observed on Oct. 23 and 24 was skewed towards call options.

However, the landscape changed as investors increasingly sought protective put options, reaching a peak of 68% higher demand on Oct. 28. More recently, the metric shifted to a neutral 1.10…

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