Bitcoin Options on Deribit: What to Expect in January 2024
On January 26, 2024, thousands of Bitcoin options on Deribit will expire. The majority of these options are call options at a price of $50,000. In contrast, there are fewer put options at $37,000. This suggests that speculators are betting on the price of Bitcoin rising above $50,000 by the expiration date.
Understanding Bitcoin Options
Options are derivative contracts that give you the right to buy or sell an asset at a predetermined price in the future. Unlike futures contracts, options provide the right but not the obligation to make a trade. Call options allow you to purchase an asset before a certain date and at a certain price. Put options, on the other hand, grant you the right to sell an asset before a certain date.
The $50,000 Level
The large number of call options at $50,000 suggests that speculators believe Bitcoin’s price will surpass this level by January 26th. If this happens, call option holders can exercise their right to purchase Bitcoin at $50,000 and sell it immediately for a higher price. However, purchasing an option has a cost, so for it to be profitable to redeem call options at $50,000, the price of Bitcoin must be significantly higher.
Bitcoin Price in 2024: Options on Deribit
Looking at all the deadlines until December, there are over 23,500 call options at $50,000 compared to less than 5,700 put options at $40,000. This indicates that speculators expect Bitcoin’s price to fluctuate between $40,000 and $50,000 in the near future.
The Drop Below $40,000
While some predict a drop to $35,000, the markets currently do not seem to be pricing in this scenario. There are more put options at $40,000 than at $35,000, suggesting that traders are betting on Bitcoin’s resistance at the $40,000 level. However, it’s worth noting that market dynamics can change rapidly.
Hot Take: What Lies Ahead for Bitcoin Options
While the options market is unpredictable, upcoming events such as the potential approval of Bitcoin ETFs and the Fed’s interest rate cuts could drive bullish momentum. Despite possible retracements, there is a possibility of an upward rebound in the coming months.
By
By
By
By
By