- 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.
Big payouts
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 sebastian@dlnews.com.
