Date: December 2, 2021
As the value of bitcoin continues to skyrocket, traders are eagerly placing their bets on the cryptocurrency’s climb above $50,000 per coin, a milestone last reached in December 2021.
According to data provided by CCData, there are currently over 47,489 open call options with a strike price at $50,000 or higher. The most popular contracts are set to expire later this month, although traders are also buying up options expiring in January and March.
For those unfamiliar with options trading, a call option grants the holder the right (but not the obligation) to buy the underlying asset at a predetermined price (the strike price) within a certain timeframe. On the other hand, a put option gives the right (but not the obligation) to sell.
In recent weeks, overall interest in bitcoin options contracts has surged by around 50,000 contracts. Many of the call options expiring in December were already in-the-money, meaning traders could exercise their contracts for a profit.
Hosam Mahmoud, a research analyst at CCData, noted, “Recent data reveals significant trading volumes and open interest for options with a $50,000 strike price expiring in January and March. Additionally, there has been a notable increase in both open interest and overall volumes for options instruments, reflecting an increased speculative inclination among investors.”
Interestingly, demand for bearish bets on bitcoin has also risen, contributing to a higher put-call ratio. The put-call ratio measures the number of outstanding put contracts compared to outstanding call contracts, with the current ratio standing at nearly 0.48, up from 0.37 on November 1.
While bitcoin prices experienced a slight decline on Thursday, according to CoinDesk data, the cryptocurrency remained close to its highest level since April, trading at $43,683, a decrease of 0.3%.
The surge in bitcoin prices can be attributed to several factors, including hopes for the approval of a spot bitcoin exchange-traded fund (ETF) early next year, as well as expectations of a potential interest rate cut by the Federal Reserve in early 2022. These factors have fueled a broader speculative rally on Wall Street.
To summarize, traders are placing their bets on bitcoin as its value continues to climb towards the $50,000 mark. Options contracts expiring in January and March are particularly popular, reflecting an increased speculative interest in the cryptocurrency. Additionally, the put-call ratio has risen, indicating higher demand for bearish bets on bitcoin. Despite a slight dip in prices, bitcoin remains near its highest level since April.