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Bitcoin (BTC) Options Market Remains Bullish Despite Recent Downtrend
Options Flow Suggests Continued Demand for Bullish Exposure
Despite Bitcoin (BTC) trading below $100,000 this month, options data suggests that traders are still betting on a potential upside. According to Amberdata, the cumulative net premium for buying the $110,000 call expiring on March 28 has reached over $6 million.
What is a Call Option?
A call option gives the buyer the right, but not the obligation, to purchase the underlying asset at a predetermined price on or before a specific date. In the context of Bitcoin, a call option buyer is implicitly bullish on the market, while a put buyer is bearish, looking to hedge against downside risks.
Options Flow in Focus: March $110,000 Call
According to Greg Magadini, director of derivatives at Amberdata, the buying of March $110,000 calls has been the most active trade among on-screen traders. “Looking at the month-to-date flows for on-screen traders, the buying of March $110K calls has been the most active trade,” Magadini said.
Bitcoin’s Recent Price Action
Bitcoin has been trading within a narrow range of $95,000 to $100,000 this month. While the bulls have had some positive developments to latch onto, such as MicroStrategy’s continued accumulation and Abu Dhabi’s recent investment in the bitcoin ETFs, renewed macroeconomic headwinds have capped the upside potential.
Macro Headwinds Weighing on the Market
Last week’s hotter U.S. inflation data and frequent liquidity drains caused by the boom-bust cycles of memecoins and other small-cap tokens have put a brake on the market’s momentum.
The Memecoin Effect
Over the weekend, a token called LIBRA zoomed to a market capitalization of over $4 billion, only to erase 90% of that within minutes. The controversy surrounding the token, which was initially promoted by Argentina’s President Xavier Milei, has left a sour taste in the market.
Bullish Headlines Not Materializing
Magadini noted that some bullish headlines hit for BTC last week, but these did not materialize into a real spike higher for spot prices. “Combine this news with bearish memecoin market drag, such as the $Libra drop, pump-and-fun mania, and growing supply of alts, and I see this market in standstill. Together, this reinforces my ‘sideways’ market, lower volatility market thesis,” Magadini added.
Conclusion
While the options market remains bullish, the recent price action in Bitcoin suggests a more subdued market. As macroeconomic headwinds continue to weigh on the market, it remains to be seen whether the bulls can regain momentum. For now, the market is stuck in a state of limbo, with bulls and bears waiting for the next catalyst to break the stalemate.
FAQs
Q: What is a call option?
A call option gives the buyer the right, but not the obligation, to purchase the underlying asset at a predetermined price on or before a specific date.
Q: What is the current price of Bitcoin?
Bitcoin is currently trading below $100,000.
Q: What is the market sentiment in the options market?
The options market remains bullish, with buyers paying a cumulative net premium of over $6 million for the March $110,000 call.
Q: What are the macroeconomic headwinds affecting the market?
Renewed macroeconomic headwinds, including hotter U.S. inflation data and frequent liquidity drains caused by memecoins and other small-cap tokens, are weighing on the market.
Q: What is the market’s outlook for the short term?
The market is expected to remain in a state of limbo, with bulls and bears waiting for the next catalyst to break the stalemate.
