Bitcoin option traders’ use of neutral-to-bullish strategies explains the recent BTC price action.
The recent gains are a rare sight in 2023, even considering Bitcoin's impressive 108% year-to-date performance. Notably, the last instance of such price action occurred on March 14 when Bitcoin surged from $20,750 to $26,000 in just two days, marking a 25.2% price increase.It's worth noting the significance of the fact that a staggering 208,000 contracts changed hands in a mere two days.
if BTCUSD moves higher to $35,750-36k, options dealers will need to buy $20m in spot BTC for every 1% upside move, which could cause explosiveness if we begin to move up towards those levelsAccording to estimates from Galaxy Research and Amberdata, BTC options market makers may need to cover $40 million for every 2% positive move in Bitcoin's spot price. While this number may seem substantial, it pales in comparison to Bitcoin's staggering daily adjusted volume of $7.8 billion.
However, the landscape changed as investors increasingly sought protective put options, reaching a peak of 68% higher demand on Oct. 28. More recently, the metric shifted to a neutral 1.10 ratio on Oct. 30, indicating a balanced demand between put and call options.To gauge whether investors using options have grown more confident as Bitcoin's price held above $34,000 on Oct. 30, one should analyze the Bitcoin options delta skew.
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