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Bitcoin Bulls Bet Big: $100K Call Option Draws Nearly $1B on Deribit

Bitcoin bulls are betting big with nearly $1 billion in open interest for $100,000 call options on Deribit. Learn about the implications of this bullish sentiment and its potential impact on bitcoin’s price as 2024 comes to a close.

The world of cryptocurrency has always been characterized by high volatility and speculative trading. In recent weeks, a new wave of bullish sentiment has emerged, particularly surrounding bitcoin. On Deribit, a prominent cryptocurrency derivatives exchange, traders have locked in nearly $1 billion in open interest for call options at a $100,000 strike price. This surge in demand for high-priced call options demonstrates traders' confidence that bitcoin may reach or exceed the $100,000 mark, despite current price levels. But what does this mean for the broader market, and how likely is such a surge?

Table of Contents

The Rise of the $100K Call Option

Bitcoin options trading has seen a significant boost, with the $100,000 call option gaining immense popularity on Deribit. As of early October 2024, the open interest for this call option exceeded $993 million, making it the most traded strike price on the exchange. A call option provides traders with the right, but not the obligation, to buy an asset at a specific price before a set expiration date. In this case, those purchasing the $100K call are betting that bitcoin will rally to six figures, giving them the chance to capitalize on significant gains.

The popularity of this high strike price indicates growing optimism among traders, as many believe that the cryptocurrency has room for further growth before the year ends.

Comparison with Other Strike Prices

While the $100K call option has garnered the most attention, other strike prices are also seeing strong demand. The $70,000 call is the second most popular, with over $800 million in open interest. Combined, these two strike prices account for a large portion of the total bitcoin options market, with call options representing more than 50% of the total open interest on Deribit, which currently stands at $14.15 billion.

These figures suggest that traders are betting on bitcoin’s price increasing in the short term, with many positioning themselves for a potential bull run. The $100K and $70K strikes reflect two tiers of optimism, one more conservative and one more aggressive.

U.S. Elections and Market Sentiment

Adding to the intrigue of these bets is the timing of the U.S. elections. Bitcoin options expiring on November 8th, the day when U.S. election results are expected, have accumulated a significant $938 million in open interest. A large portion of this amount is concentrated in put options with a $45,000 strike price, indicating that some traders are hedging against potential downside risks ahead of this key political event.

According to crypto trading firm Wintermute, the market currently displays a bias towards downside protection leading up to the elections. However, this bias may shift towards calls as the event passes, with many expecting a post-election rally.

A Year-End Surge in the Cards?

While many traders on Deribit are betting on a rally, decentralized betting platform Polymarket presents a more cautious outlook. According to data from Polymarket, traders see only a 15% chance of bitcoin reaching $100,000 by the end of the year. The “Will Bitcoin Hit $100K in 2024?” contract is trading at 15 cents, reflecting a relatively low probability of a six-figure surge.

Still, there’s more optimism regarding bitcoin breaking its previous all-time high of $73,798, with a 50% chance of this happening before 2025. This cautious sentiment on Polymarket contrasts with the overwhelming bullish sentiment on Deribit, creating a dichotomy between speculative optimism and more pragmatic market expectations.

The Bigger Picture: What Does This Mean for Bitcoin?

The significant demand for bitcoin call options at such high strike prices reflects growing confidence in the cryptocurrency market. Whether this is driven by technical analysis, market cycles, or broader macroeconomic factors, one thing is clear: many traders are positioning themselves for the possibility of a substantial price rally.

However, there are also risks to this optimistic outlook. Political uncertainties, regulatory developments, and economic events such as the upcoming U.S. elections could influence market sentiment, driving both volatility and price action.

Conclusion

The nearly $1 billion in open interest for the $100K bitcoin call option on Deribit is a bold bet on the future of bitcoin. While this signals strong bullish sentiment among traders, it remains uncertain whether bitcoin can actually reach the $100,000 mark by the end of the year. With important events such as the U.S. elections on the horizon and varying opinions on platforms like Polymarket, traders and investors will need to stay vigilant and prepared for potential market swings in the months ahead.

FAQs

What is a bitcoin call option?

A bitcoin call option is a financial contract that gives the buyer the right, but not the obligation, to purchase bitcoin at a predetermined price (strike price) before or on a specified expiration date.

Why is the $100,000 call option so popular?

The $100,000 call option on Deribit has drawn nearly $1 billion in open interest, showing strong bullish sentiment among traders who believe bitcoin may rally to or above $100,000 by year-end.

What does open interest mean in options trading?

Open interest refers to the total number of outstanding derivative contracts, such as options or futures, that have not been settled. In this context, it shows how many $100K bitcoin call options are actively being traded.

How do U.S. elections affect bitcoin options?

The upcoming U.S. elections have driven interest in bitcoin options, particularly around downside protection through put options, as traders hedge against market volatility during this key event.

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

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