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- Rachel Lin pointed out that the scarcity of traders selling $30,000 bitcoin call options indicates a prevailing belief among market participants that the price will not remain below this threshold for an extended period.
- There's a formidable resistance building at $31,000, evidenced by the high open interest in calls.
Rachel Lin, the CEO of SynFutures, a decentralized exchange for derivatives, expressed her view in a note on Friday, suggesting that the recent dip of Bitcoin (BTC) below the $30,000 level should be viewed as a short-term correction rather than a shift in the prevailing bullish trend.
“Despite bitcoin's fall below $30,000, there is a conspicuous lack of $30,000 call [option] selling from bearish traders,” Lin said. “This suggests they don't foresee the $30,000 level transforming into significant resistance, at least in the near term.”
In July, the leading cryptocurrency, bitcoin, dominated the market with its impressive market capitalization. Its value surged above $30,000 for the majority of the month, even reaching a near one-year peak of $31,800 earlier this month. Several factors contributed to this positive trend, including the submission of a spot bitcoin ETF application by the renowned asset management firm, BlackRock, and a partially favorable court ruling concerning Ripple's XRP.
Despite the promising surge, the bullish momentum has waned in recent days. Bitcoin prices experienced a dip, falling below the $29,000 mark earlier this week. Nevertheless, there was a modest recovery, and as of now, the current value stands at $29,350.
Lin believes that the loss of the $30,000 level is merely a fleeting deviation in the short term.
“While this technical drop may induce concern, given the robust uptrend over the past six months, it's sensible to consider this merely a short-term correction," she said, adding that the $31,000 call option “continues to attract high open interest” from traders. Lin said this is a sign that the price level poses a “potent resistance” in case of a bounce in BTC’s price.
Options are financial instruments that grant investors the privilege to buy or sell an underlying asset at a predetermined price on a specified future date. When someone acquires a call option, they obtain the right to purchase the asset, whereas purchasing put options gives them the right to sell the asset. As an illustration, in the world of bitcoin trading, call options are frequently employed by traders to place cost-effective, leveraged bullish wagers on the price movement.
Matrixport, a Singapore-based provider of crypto services, suggests that investors consider selling spot BTC and purchasing call options instead to enhance their returns, particularly during periods of low volatility in the cryptocurrency market.
The current trading price of Bitcoin, as indicated by the CoinDesk Bitcoin Price Index, stands at $29,350, reflecting a 1.5% decline over the course of the week.
