Bitcoin has held up well above $ 47,5,000 since August 20. When the price broke the critical $ 48,000 mark, many in the community clearly saw the path above $ 50,000. With the king coin still having to break through a few levels of resistance before it can oscillate above $ 50,000, the spot market is somewhat cautious with its moves.
However, the options market offers some interesting cards, each of which could dictate Bitcoin’s short-term action.
This means a three-month high
With BTC encountering resistance at USD 49,000, trading volumes on the spot market did not show any major swings. However, the option volume peaked on August 20 – an increase of nearly 40%. In addition, it is also noteworthy that the Open Interest (OI) for Bitcoin options will be closed on August 21, a week before the next major options expiration on August 27.
This means that in less than a week, 40.2k bitcoins will go through a contract expiration. Options are derivative contracts that give the holder the right, but no obligation, to buy or sell an underlying asset at a predetermined price. This is also known as the “payout price”.
OI trends usually highlight peaks just before or at some point before the expiration date and are incremental after each expiration.
The same indicated an increase in liquidity in the options market and a greater number of participating investors. As can be seen from the graph above, a sustained surge in Options OI alongside the surge in BTC suggests this trend will continue. Notably, the open interest on August 21 was the highest in three months.
How bullish is Bitcoin REALLY?
The call-to-put ratio was 2.01 at the time of writing, indicating bullish call options. The data reflected the 115,843 BTC call options versus the 57,742 put options. Calls clearly dominated the puts with almost 50%.
So while bears assume the price of BTC will drop below $ 44,000, bulls need a strong boost above $ 50,000 to stay in the game. However, the expiration of the contracts on August 27th could increase the volume of Bitcoin and add more market momentum. This will be vital to keeping the rally going.
At the moment, it seems like the market is more optimistic on Bitcoin than it has been in recent months.