Bitcoin (BTC) has recorded its first three-week winning streak since February, according to data from TradingView. The rally was marked by traders buying call options, which offer asymmetric upside potential above $75,000.
The leading cryptocurrency rose more than 3% in the seven days to September 29, extending the more than 7% price increase recorded in the previous two weeks. China's massive stimulus announcement and inflows into US-listed spot exchange-traded funds (ETFs), equivalent to more than a month's worth of newly mined BTC supply, may have helped sustain the rally.
As prices rose, traders saw heavy buying of call options at the $75,000 strike and higher on the Deribit exchange. At the same time, investors also sold put options.
“This flow pattern suggests a bullish outlook for spot prices (due to the selling of put options) while also predicting an increase in price volatility,” Greg Magadini, Amberdata’s director of derivatives, said in a statement.
A call option gives the holder the right, but not the obligation, to buy the underlying asset, BTC, at a specified price at a later date. Call option buyers are typically bullish on the market, while put option buyers are bearish and want to hedge against price declines.
The bullish flow of increased call and put buying suggests expectations that prices will soon break out of a six-month-old corrective trend, dubbed the “expanding triangle” by veteran analyst Peter Brandt.
A potential breakout would indicate that the broader uptrend from the sub-$30,000 low in October 2023 has resumed.
“A break above $75,000 could lead to a strong rally, surpassing all-time highs and heading towards $100,000, where call activity is concentrated on the December 27, 2024 expiration,” Magadini said.
