Options trading desks saw heavy buying activity for BTC calls with June expiry.

BTC "ready to squeeze higher" with some $1.5 billion worth of shorts concentrated around the $72,000 that can be liquidated, Matrixport noted.

Bitcoin {{BTC}} options traders are increasingly positioning for the asset to hit fresh record prices this month, market data suggests.

"Our desk saw strong bullish follow-through with significant call buying for June expiries, indicating positioning in the options market for a decisive break of 74,000 all-time-highs this month," digital asset hedge fund QCP said in a Wednesday market update.

Options are derivative contracts that give buyers the right to buy or sell an asset at a certain price before or at a predetermined date when the contract expires. If the underlying asset doesn't reach the strike price (out of money), the option will expire worthless. Purchasing calls implies a bullish outlook for an asset's price, while put option buyers are bearish.

"Options flow was clearly bullish today with big sizes on long BTC OTM [out-of-money] call spreads in end June, and to a lower extent end July," institutional crypto derivatives trading network Paradigm said in a Telegram broadcast.

Joshua Lim, co-founder of crypto derivatives principal trading firm Arbelos Markets, noted "very concentrated call buying" on Tuesday with about 1100 contracts purchased of June 28 expiration call spreads in $74,000-$80,000 strikes, representing around $80 million notional demand.

A call spread is an options trading strategy in which buys of call options at a lower strike price and are made alongside sales of the same amount of calls at a higher strike price with the same expiry, aiming to profit from a limited price increase.

Bitcoin has spent almost three months consolidating since notching an all-time high slightly below $74,000 in mid-March. After plummeting briefly below $57,000 in early May, it saw a steady recovery, now changing hands at around $71,000, only a few percentage points from new record prices.

Crypto investment services firm Matrixport said in a Wednesday X post that bitcoin "appears to be ready to squeeze higher," supported by heavy inflows to U.S. spot bitcoin exchange-traded funds and rising open interest in the futures market.

Yesterday, we mentioned that #Bitcoin futures traders were increasing their positions and two days ago we mentioned that Bitcoin was about to break out of the bullish triangle formation. Combined with the second largest net buying of Bitcoin #Spot #ETFs last night, #BTC appears… pic.twitter.com/pZPQi97CXx

— Matrixport (@realMatrixport) June 5, 2024

A surge above the $72,000 level could induce a short squeeze, Matrixport noted, as there's some $1.5 billion worth of leveraged futures contracts betting on lower prices concentrated around that range that could be liquidated, exacerbating the move higher.