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Institutional traders expect Bitcoin to soar to $79,300 by the end of November. This bullish sentiment is evidenced by recent trading activity on the Chicago Mercantile Exchange (CME), where Bitcoin options trading volume was at an all-time high ahead of the US presidential election.
Will Bitcoin surpass $79,300?
Joshua Lim (Co-founder of Alberos Markets, a trading company that provides liquidity across the crypto derivatives market)share X insights on these notable deals. “CME Bitcoin Options just posted its highest trading volume ever ahead of the US elections,” Lim said.
He highlighted two important transactions that have occurred over the past week. On Friday the 25th, traders bought 1,875 Bitcoins out of the $70,000 strike call from the 29th to November. In options trading, a call option gives the buyer the right, but not the obligation, to buy an asset at a specified strike price before the option expires. In this case, the strike price is $70,000, meaning the buyer is betting that Bitcoin will exceed this price by the end of November. Mr. Lim detailed that at the time of the transaction, “a premium of $8.3 million, $147,000 for Vega and $65 million for Delta was paid.”
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Then, on Tuesday the 29th, another significant trade occurred to buy 3,050 Bitcoin units out of the 29th-November $85,000 strike call with a strike price of $85,000. Lim said that at the time of the deal, “a premium of $4.6 million was paid, $173,000 for Vega and $42 million for Delta.”
The amounts of $8.3 million and $4.6 million represent substantial investments and reflect strong confidence in Bitcoin’s upside potential. The high Vega suggests that traders are expecting significant volatility, which could rise significantly around the US election. Delta represents how much the option’s price is expected to change if the price of the underlying asset changes by $1. The high delta values of $65 million and $42 million mean that they are significantly exposed to Bitcoin price fluctuations.
The total notional amount of these positions, or the total amount of the underlying assets represented by the options, is approximately $350 million. Lim pointed to the world’s largest crypto options exchange, which is “big even in the context of Deribit.”
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The breakeven point for these positions is just under $79,300. This means that the price of Bitcoin must exceed this level by the expiration date of the option for the trader to start making profits. This price represents an increase of approximately 16% from the price of Bitcoin when these trades were executed.
“We are very bullish going into the election and it’s great to see institutions scaling up like this at CME,” Lim commented. He added: “Liquidity in the crypto derivatives market is increasing now and may be a good sign that it will continue to increase as the asset class matures.”
The timing of these transactions is particularly noteworthy. With the US presidential election just around the corner, market volatility is expected to increase, potentially impacting Bitcoin and the cryptocurrency market as a whole. Overall, the majority of experts believe that President Trump’s victory is bullish for BTC price.
At the time of writing, BTC was trading at $72,382.
Featured image created with DALL.E, chart on TradingView.com
https://www.newsbtc.com/bitcoin-news/institutions-bet-bitcoin-79300-end-of-november/