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Bitcoin is finally seeing some green after trading at a loss for the past two weeks. The cryptocurrency continues to trade within a tight range, but activity in the options market could signal a possible run towards new highs.
As of this writing, bitcoin (BTC) is trading at $27,900 with a 2.5% gain over the past 24 hours. During the past week, the cryptocurrency has seen two gains, registering a 4.4% performance. Other cryptocurrencies in the top 10 by market cap are experiencing similar momentum.
Bitcoin Options Signaling Fresh Rally?
Data from crypto options trading platform Deribit it shows A decline in implied volatility (IV). This metric measures the expectation of future price movements by market participants.
IV is trading sideways for the past one month with a downtrend. deribit Claim The growing uncertainty in the crypto market and the macroeconomic landscape is fueling the current dynamics on this metric, which translates into slower price action for BTC and crypto.
As the price of bitcoin soars, option buyers are selling their contracts. When the opposite happens, and BTC sees an uptrend, option sellers exit their contracts.
This dynamic has exerted “sustained selling pressure” on IV and contributed to suppressing the BTC spot area. However, the upcoming US debt ceiling, the day on which this country could default on its national financial commitments, could change the status quo.
The narrative surrounding this event signals a further appreciation for BTC and risk-on assets. Today, equities and crypto rally as major political factions in the North American country reach a tentative agreement Which can avert a worldwide financial crisis.
In developments over the weekend and today, Deribit noted that BTC options to maturity turned profitable. The exchange also saw aggressive calls buying as the outlook indicated profits for the cryptocurrency and the price returned north of $27,000.
This big player bought calls (buy orders), betting that BTC could reach $34,000 in July/August 2023, as can be seen in the chart below.
Deribit said in a market update:
Sub 7 day ATM -28k calls + Jul 31k calls were bought valiantly ahead of the long weekend and turned profitable as debt-ceiling talks progressed and a large DSOB buyer of Jul+Aug 34k from spot slicing through 27.3k Called aggressively at higher prices just before. and now 28k
Cover image from Unsplash, chart from Tradingview
