Options trading desks have witnessed substantial buying activity for Bitcoin (BTC) calls with June expiry, indicating growing optimism among traders for the cryptocurrency to reach new record prices this month.
According to market data, Bitcoin options traders are increasingly positioning themselves for a potential surge in the asset’s value. Notably, digital asset hedge fund QCP reported significant call buying for June expiries, suggesting anticipation of a decisive break above the $74,000 all-time high.
Options, derivative contracts granting buyers the right to buy or sell an asset at a predetermined price before or upon expiry, serve as indicators of market sentiment. In this case, the purchase of calls reflects a bullish outlook for Bitcoin’s price trajectory.
Institutional crypto derivatives trading network Paradigm highlighted bullish options flow, particularly emphasizing substantial volumes in long BTC out-of-money call spreads for end-June and end-July contracts.
Joshua Lim, co-founder of crypto derivatives principal trading firm Arbelos Markets, observed concentrated call buying activity on Tuesday, with significant demand for June 28 expiration call spreads between the $74,000 and $80,000 strikes, totaling around $80 million in notional value.
A call spread strategy, involving the simultaneous purchase of call options at a lower strike price alongside the sale of an equal amount of calls at a higher strike price with the same expiry, aims to capitalize on a moderate price increase.
Bitcoin has undergone a consolidation phase for nearly three months since reaching an all-time high just below $74,000 in mid-March. Following a brief dip below $57,000 in early May, the cryptocurrency has experienced a steady recovery, currently hovering around $71,000, tantalizingly close to surpassing previous record levels.
Matrixport, a crypto investment services firm, noted Bitcoin’s potential for an upward breakout, citing substantial inflows into U.S. spot bitcoin exchange-traded funds and an uptick in open interest in the futures market.
Furthermore, Matrixport highlighted the possibility of a short squeeze if Bitcoin breaches the $72,000 threshold, as approximately $1.5 billion worth of leveraged futures contracts betting on lower prices are concentrated in that range. Liquidation of these positions could exacerbate upward price movement, amplifying the bullish momentum.
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