Bitcoin Heading for $34,000? Buy Signals from a Big Buyer Yes

Image by: Andrew Ling – Unsplash

After trading at a loss for the past two weeks, Bitcoin is finally back in the green. The cryptocurrency continues to trade in a tight range, but activity in the options market could signal a possible rush to fresh highs.

As of this writing, Bitcoin (BTC) is trading at $27,900 with a 2.5% gain in the last 24 hours. Over the past week, the cryptocurrency has doubled its gains with a performance of 4.4%. Other cryptocurrencies in the top 10 by market cap are experiencing similar dynamics.

BTC price is recording small gains on the daily chart. Source: BTCUSDT trade view

Bitcoin options point to a new rally?

Data from crypto options trading platform Deribit suggests a drop in implied volatility (IV). This indicator measures the expectation of future price movements by market participants.

IV has traded sideways for the past month with a downward bias. Deribit claims that growing uncertainty in the crypto market and macroeconomic landscape is driving the current momentum of this metric, reflected in slow price movements for both BTC and crypto.

As Bitcoin’s price declines, option buyers have sold their contracts. When the opposite happens and BTC is in an uptrend, option sellers sell their contracts.

These dynamics have put “constant selling pressure” on IV and contributed to the suppression of the BTC spot sector. However, the upcoming US debt ceiling, when the country could default on its national financial obligations, could change the status quo.

The narrative surrounding this event points to further appreciation of BTC and risky assets. Today, stocks and cryptocurrencies rallied as key political factions in the North American country reached a tentative agreement that could avert a crisis across the financial world.

Over the weekend and today’s development, Deribit found that BTC options expiration was proving profitable. The stock market has also seen aggressive calls to buy as the landscape signals gains for the cryptocurrency and prices surge back above $27,000.

This major player was buying calls, betting that BTC could reach $34,000 somewhere in July/August 2023 as seen in the chart below.

BTC spike calls for $34,000 after interim debt relief. Source: Deribit via Twitter

Deribit explained in a market update:

Sub 7-day ATM 28,000 calls + 31,000 July calls boldly bought ahead of the long weekend. Theta turned profitable as debt ceiling talks progressed and a big DSOB buyer from 34k calls accumulated aggressively to higher prices in July and August just before spot broke 27.3k and now 28k

Cover image from Unsplash, chart from Tradingview

Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers