Renewed Enthusiasm in Bitcoin Derivatives Market
If you’ve been keeping an eye on the cryptocurrency market, you might have noticed a surge in Bitcoin derivatives activity that’s reminiscent of late 2021. This uptick in activity has sparked renewed enthusiasm among traders, pointing to a potential revival of speculative interest in Bitcoin. The cost of perpetual futures trades and increasing options open interest are just some of the factors contributing to this renewed interest in the cryptocurrency. This surge in activity comes as Bitcoin has experienced a significant price recovery this year, with its value more than doubling after a tumultuous 2022.
Bitcoin Options Open Interest Hits New All-Time High
According to Bloomberg, the heightened attention around the potential approval of the first US spot Bitcoin exchange-traded funds (ETFs) has contributed to the surge in derivatives activity. The anticipation of these ETFs being approved is expected to attract a broader range of investors to the asset, leading to increased demand and riskier trading strategies. The largest crypto options exchange, Deribit, reported a record notional value of approximately $14.9 billion in Bitcoin options open interest earlier this week, surpassing the previous high set in 2021. This indicates a strong demand for crypto call options and potential leveraged positions speculating on a potential breakout beyond $100,000.
Insights From Futures And Options Charts
Perpetual futures, which have no set expiry date, are popular BTC derivatives. The funding rate for these futures tends to be positive during bullish periods, and the rolling seven-day average funding rate closely resembles levels seen in late 2021 when Bitcoin was surging to its peak. Bitcoin futures curves provide insights into price outlooks, with the entire curve based on Chicago Mercantile Exchange (CME) Group contracts shifting upward compared to a month ago. Additionally, data from Deribit reveals a predominance of bullish options bets on BTC, reaching $40,000 and even $45,000 by the end of December.
Hot Take: Bitcoin’s Ongoing Rally and Market Sentiment
The surge in Bitcoin derivatives activity and the growing interest in options and perpetual futures indicate a renewed bullish sentiment among traders. As Bitcoin approaches key resistance levels, market participants eagerly watch for further developments, with $40,000 seen as a crucial juncture in the ongoing rally. The potential approval of US spot Bitcoin ETFs has undoubtedly contributed to the heightened enthusiasm in the market, with many eyes focused on the cryptocurrency’s price movements and derivatives activity.
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