TL;DR
- Deribit sees a surge in the $200,000 Bitcoin call option, indicating investor optimism for a more than 200% increase in Bitcoin price by the end of 2024.
- The futures market and the DVOL index also show a positive and volatile outlook for Bitcoin, as the cryptocurrency reaches new highs and faces growing adoption and demand.
- The options market signals are not a guarantee, but a reflection of the market sentiment and expectations for Bitcoin’s future performance.
Deribit, the leading crypto options exchange, has witnessed a surge in activity in the $200,000 Bitcoin call option, signaling investor optimism about the future of the cryptocurrency. The $200,000 strike price is nearly three times the current market rate of Bitcoin, which is hovering around $67,000.
According to Deribit Metrics, the notional open interest in the $200,000 Bitcoin call option exceeded $20 million on Friday, with most of it concentrated in the December 31, 2024 expiry. This means that investors are essentially betting that Bitcoin will end the year above that level, which would imply a more than 200% increase from the current price.
The interest in the deep out-of-the-money (OTM) call option reflects the return of animal spirits to the market, as traders anticipate a bullish scenario for Bitcoin in the coming months. Some of the factors that could drive the price higher include the growing adoption of Bitcoin by institutional investors, the launch of spot Bitcoin ETFs in the U.S., and the supply-demand imbalance caused by the halving of Bitcoin rewards every four years.
Beyond the Options Market: Exploring Bitcoin’s Futures Market and DVOL Index Trends.
The options market is not the only indicator of investor sentiment. The futures market also shows a positive outlook, as the futures contracts trade at a premium to the spot price, implying that traders expect the price to rise in the future. The total notional open interest across crypto futures and options on Deribit has reached a new peak of $32 billion, with the options market contributing almost $30 billion to this figure.
Bitcoin’s volatility has also increased, as measured by Deribit’s DVOL index, which tracks the expected price fluctuations over the next 30 days. The index has surged to an annualized 76%, the highest since November 2022, indicating that traders are preparing for more price turbulence in the near term.
Bitcoin has been on a strong uptrend since the start of the year, gaining nearly 60% and reaching a new all-time high of over $69,000 earlier this week. A broader measure of the crypto market has also shown a rise of 45% year-to-date. Whether Bitcoin can sustain its momentum and reach the lofty levels implied by the options market remains to be seen, but the market signals suggest that investors are not ruling out the possibility.
