- A number of trades suggest Bitcoin could surge to $55,000 before the end of June.
- Demand from ETFs will continue to outstrip Bitcoin supply, leading to a higher price before the asset’s halving event in April, analysts said.
Traders are betting that Bitcoin will rise to $55,000 and beyond by June.
Options contracts that pay off if Bitcoin reaches around the $55,000 to $57,000 price range are among the most popular among traders. That signals a growing consensus of a Bitcoin rally. Those contracts are set to expire at the end of June.
The bets come as the price of Bitcoin has dropped 12% from its early January $49,000 peak, echoing other analysts predicting that the wobble may be short-lived.
Several factors could drive a Bitcoin surge.
They include continuous bullishness about US spot Bitcoin exchange–traded funds; the prospect of the Federal Reserve cutting interest rates; Chinese stock market troubles; and the upcoming “halving” event, which will cut the amount of new Bitcoin coming to market by half.
The price of bullish bets, or calls, on options has risen, suggesting a rise in demand, “as the market maintains a positive six-month outlook,” analysts at digital assets brokerage K33 wrote in a separate report.
Options allow traders to pay a fee immediately for the right to decide whether to buy or sell an asset at a set price in the future.
On the CME, contracts that pay off when Bitcoin reaches $57,000 were the most popular, with a combined potential payoff of about $17 million.
On Derebit, contracts that pay off when Bitcoin reaches $55,000 drew the most trader demand, potentially paying out $154 million.
Meanwhile, short-term options pricing indicates investors are hedging their bets, K33 analysts said.
The price to wager on Bitcoin’s short-term price fluctuations is currently even, reflecting a lack of major drivers, they said.
Jamie Coutts, a freelance blockchain strategist who formerly worked at Bloomberg Intelligence, told DL News that Bitcoin had been experiencing a “hangover” from the lead-up to the ETF launch on January 10.
From September to December, Bitcoin options contracts hit a record $18 billion, doubling leverage in what Coutts labelled “rare” market behaviour. Open interest has since fallen to $10 billion, data shows.
This will enable “the underlying supply-and-demand drivers [to] come to the fore,” Coutts said.
“Should the ETF demand continue at current rates, which is roughly twice the daily supply, then the price of Bitcoin should breach $49,000 as we approach the halving,” Coutts said.
Sebastian Sinclair is a markets correspondent for DL News. Have a tip? Contact Seb at firstname.lastname@example.org.