Concerns about Bitcoin (BTC) price corrections and potential selling from bankrupt lender Genesis seem forgotten as traders flock to out-of-the-money (OTM) calls, signifying bullish bets, at levels exceeding $65,000, near its all-time high.
This surge in options activity, particularly on Deribit, the leading crypto options exchange, mirrors the optimistic sentiment of the 2020-2021 bull run, when traders eagerly acquired calls well above the market price.
Key Takeaways:
- High-strike calls (>$65k) soar on Deribit, hinting at bullishness among experienced investors.
- Strong ETF inflows and recent price gains fuel optimism.
- Overbought RSI and potential Genesis liquidation raise cautionary flags.
Breaking Down the Action:
- Over the weekend, numerous calls at strike prices of $65,000, $70,000, and $75,000 changed hands on Deribit.
- These OTM calls allow investors to buy Bitcoin at a specific price by a certain date, reflecting confidence in future price appreciation.
- Kelly Greer, Head of Americas Sales at Galaxy, sees this as a sign of “conviction” and a “constructive view on Bitcoin.”
- Similar OTM call activity in late 2023 preceded a significant price rally.
Echoes of a Bullish Past:
- This behavior resembles the 2020-2021 bull run, when sophisticated investors bought calls at seemingly high strikes like $80,000.
- Bitcoin has nearly doubled since October, fueled by strong ETF inflows.
Cautionary Notes:
- Bitcoin’s 14-day RSI exceeding 70 indicates overbought conditions, potentially leading to a pullback.
- Alex Kuptsikevich of FxPro warns of potential profit-taking and approaching resistance at January’s peak.
- Looming concerns include forced sales of $1.6 billion in crypto by Genesis, which could dampen prices.
Looking Ahead:
- While bullish options bets suggest confidence, potential headwinds like overbought conditions and forced sales raise caution.
- This scenario presents an intriguing test of investor sentiment and its impact on Bitcoin’s price trajectory.
