Option Traders Betting on Bitcoin (BTC) Price at $50,000, Key Levels to Watch

Amid Bitcoin’s recent price rally to $44,000, Bitcoin option traders have turned bullish expecting the Bitcoin price to touch $50,000 by the end of January 2024. The traders have pinned their hopes on the approval of the spot Bitcoin ETF likely in the first ten days of 2024.

Traders Choosing Bitcoin Options for January 2024

Greeks.Live, a platform for options traders, reports fluctuations in BTC’s December options share. While last week saw the share rise above 50%, the market’s recent progress has caused it to drop back below this threshold. This dynamic is attributed to a notable surge in short-term options positions driven by short-term market trends.

Additionally, traders expressing bullish sentiments toward the ETF are opting for January options. The current market activity reflects a heightened level of activity, similar to the atmosphere observed at the end of 2020, it noted.

Bitcoin has experienced a notable surge of over 60% since mid-October, fueled by speculation surrounding potential approval of ETF applications by the Securities and Exchange Commission, particularly from major asset management player BlackRock. As of Wednesday, Bitcoin was relatively stable, hovering around $44,000.

In November, the combined trading volume in both spot and derivatives on centralized exchanges witnessed a substantial 40.7% increase, reaching $3.61 trillion. This combined total represents the highest recorded since March, according to data from researcher CCData.

Derivatives trading, including options and futures, continues to play a prominent role in the cryptocurrency market. The prevalence of cash-settled options and futures contracts is noteworthy, offering traders the flexibility to execute strategies without grappling with specific crypto-related challenges like custody.

BTC Price At New All-Time High

The BTC price has been currently trading at levels not seen since December 2021. Now, with the excitement building around the approval of the first spot Bitcoin ETF, the bullish sentiment in the market continues. This could also lead to higher BTC price volatility going ahead.

With the potential advent of a Bitcoin ETF and a resurgence of risk-taking sentiment in the broader financial markets, traders are expecting increased interest in the cryptocurrency space.

Greg Magadini, the Director of Derivatives at Amberdata, noted, “We’ve seen this year that as BTC moves higher, volatility has followed. So, a sustained bull market might bring back some more volatility in the short and medium term.”

Cryptocurrency analyst Ali Martinez has identified a stable support level for Bitcoin at $42,700, backed by 642,000 wallets that have accumulated 347,000 BTC at this price point. He added:

• In the event of a continued bullish trend, there is potential for a push toward the next significant supply zone at $47,300. At this level, 614,000 wallets are holding 427,000 BTC.
• On the flip side, if the $42,700 support is breached, attention will shift to the $38,000 mark, emerging as the next critical area to monitor.