In a lethargic Bitcoin market, traders are positioning themselves for potential gains through options trading. A $110K call option play has emerged as the top strategy.
Bitcoin’s price has been relatively stagnant this month, hovering below $100,000. Despite this, traders continue to position themselves for potential gains through options trading.
The most preferred option play so far this month is buying the $110,000 call expiring on March 28. Buyers are paying a cumulative net premium of over $6 million for the bullish exposure, according to Deribit’s options flow tracked by Amberdata.
Understanding Call Options and Their Role in Trading
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 this case, the buyer is implicitly bullish on the market, expecting Bitcoin’s price to rise above $110,000 by March 28.
Market Analysis and Headwinds
Bitcoin has mostly traded within a narrow range of $95,000 to $100,000 this month, despite some positive developments such as MicroStrategy‘s continued accumulation and Abu Dhabi’s recent investment in bitcoin ETFs. However, renewed macroeconomic headwinds, including 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, appear to be capping the upside potential.
The Impact of Memecoins on Bitcoin’s Price
The recent surge in a token called LIBRA, which reached a market cap of over $4 billion before erasing 90% of that value within minutes, highlights the volatility and unpredictability of the cryptocurrency market. This volatility can have a negative impact on Bitcoin’s price, as seen with the recent ‘Libra drop.
Expert Insights
Greg Magadini, director of derivatives at Amberdata, notes that despite some bullish headlines for Bitcoin last week, there was no real spike in spot prices. He attributes this to the bearish memecoin market drag and the growing supply of altcoins, which reinforces his ‘sideways market, lower volatility thesis.’
Conclusion
In a lethargic Bitcoin market, traders are finding ways to position themselves for potential gains through options trading. The $110K call option play is one such strategy that has emerged as the most preferred this month. While there are headwinds to consider, including macroeconomic uncertainty and memecoin volatility, some experts believe that a bullish outlook remains possible.
A bullish outlook refers to an investor's or market analyst's optimistic view of the stock market or economy.
It is characterized by expectations of rising prices, increased demand, and overall growth.
Key indicators of a bullish outlook include low unemployment rates, stable interest rates, and strong corporate earnings.
According to a survey, 60% of investors believe that 'the market will continue to rise in the next quarter.'
Historically, bull markets have lasted for an average of 3-5 years.
