Bitcoin's Record Rally Sparks Bullish Bets
The sudden surge to a fresh all-time high in Bitcoin over the weekend has options traders ramping up bets that the largest cryptocurrency could rally to $140,000.
Options Market Activity
Short-term Bitcoin options contracts expiring toward the end of the year show open interest heavily concentrated around that strike price for calls, based on data from crypto derivatives exchange Deribit by Coinbase. There's also been a moderate rise in demand for puts, as traders seek downside protection amid the rally.
Greg Magadini, director of derivatives at Amberdata, noted, "We currently see the largest notional open interest on record for Bitcoin futures and perpetual contracts, even after 'buy-to-close' liquidations. The market rally has caught people by surprise, and we aren't at the top yet, especially as many traders shorted this market."
Price Milestones and Market Dynamics
Bitcoin broke through $125,000 for the first time just after midnight Saturday in New York, driven by the 24/7 nature of crypto markets and reduced liquidity, which likely enabled bullish traders to push prices higher.
Jean-David Péquignot, chief commercial officer for Deribit by Coinbase, advised, "From here, watch for volatility spikes and any shift in put volume as a red flag for near-term corrections. Bulls have their eyes on $130K+, and bears might find opportunities in overbought squeezes."
On Monday, Bitcoin set another record, climbing as much as 2.8% to $126,251, more than doubling in value over the past year.
Macroeconomic Influences
Bitcoin's advance coincided with a US government shutdown that began on October 1, boosting demand for perceived safe-haven assets. The shutdown delayed key economic data releases, such as nonfarm payrolls. Gold also surged to a record above $3,900 per ounce, continuing its months-long rally.
Spot Market and ETF Inflows
Traders highlighted that rising demand in the spot market has been a primary driver recently. Investors poured $3.2 billion into a group of 12 US Bitcoin exchange-traded funds last week, marking the second-highest inflow since their launch in 2024. Additionally, the notional open interest on BlackRock's iShares Bitcoin Trust ETF hit a record $49.8 billion on Friday.
Derivatives and Leverage Trends
Bitcoin perpetual futures and termed contracts, common tools for adding leverage, have increased during this rally. A flurry of traders closed out short positions as prices trended higher, with open interest for these derivatives reaching $75 billion across crypto exchanges. Futures on Binance and CME saw some of the largest volumes.
Unlike previous rallies often driven by derivatives, liquidations in both long and short positions have remained subdued. In the past 24 hours, around $283 million in crypto bets were liquidated, compared to nearly $2 billion wiped out in late September during a sharp Bitcoin price drop.
Outlook and Historical Context
Adam McCarthy, a research analyst at Kaiko, commented, "If all goes well around macro updates and data releases, we could see a prolonged run into the end of the year."
October, dubbed "Uptober" by crypto traders, has historically been Bitcoin's best-performing month, with average gains of about 22.5% over the past decade.
Altcoin Movements
Ether, the second-largest digital asset, rose about 5% to $4,700 on Monday, while XRP was slightly higher, trading just above $3.
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