'A perfect storm' may be brewing for Bitcoin due to new Wall Street derivatives trading, as its price is eyeing to break through the $100K psychological level.
Bitcoin options tied to BlackRock’s Bitcoin exchange-traded fund IBIT went live on Tuesday and 'gone degen' immediately. Within 24 hours, they surged to nearly $2 billion in notional exposure, setting atypical volume levels for new options.
Options traders piled into calls, outpacing puts by 4.4:1, which likely helped propel BTC to new all-time highs.
Bitcoin ETF options are expected to boost institutional interest in Bitcoin as they unlock sophisticated trading strategies for institutions and professional investors. With options, institutional traders gain access to:
- Delta-neutral strategies
- Covered call income generation
- Risk-adjusted position management
- Arbitrage opportunities
"The launch of spot Bitcoin ETFs was already a landmark event... That, however, was only the beginning. The true catalyst is the introduction of options trading on these ETFs, which could significantly increase liquidity in the market." (Mehdi Lebbar, кофаундер Exponential.fi, for Cointelegraph)
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The projected doubling of BTC's price from ETF options trading asymmetry isn’t a market consensus, though. Traders seek maximum returns through minimal-cost, high-leverage bets. IBIT's options market data reveal speculative positioning, with February and May 2025 contracts showing a 6.7x call-to-put ratio. However, such extreme projections rarely materialize.
Glassnode reports options open interest has surpassed $40 billion for the first time. While options are a smaller derivative product than futures—currently at $60 billion in open interest—they're gaining ground, and introducing new options products could accelerate this growth.
In September, the U.S. SEC approved options for multiple spot Bitcoin ETFs across various exchanges. So, more options products are expected in the coming days.
"Prominent investors such as Jamie Dimon and Warren Buffett have criticized Bitcoin because of its reflexive nature. They have argued that it lacks intrinsic value because its price seems to move based on perception. But that is precisely the point: Bitcoin is the most reflexive asset because its supply is genuinely finite, more finite than precious metals or top-performing equities. The scarcity of Bitcoin is what makes it fundamentally valuable." (Mehdi Lebbar for Cointelegraph)
Market veteran Mehdi Lebbar of Exponential.fi views the new structural setup in the crypto market as transformative.
- Bitcoin's genuine scarcity creates a reflexive cycle: its fixed supply drives value perception, which in turn reinforces its monetary properties.
- Pending options on Bitcoin ETFs may introduce gamma squeezes, as each price increase could boost optimism and spur aggressive hedging.
This compounding effect potentially creates a feedback loop that could propel Bitcoin far beyond current price models.
In the middle of the four-year halving cycle, the Bitcoin market enters a pivotal phase. "Perfect storm" conditions are set for Bitcoin's price to surge even higher.
Similar timeframes for new highs, cycle peaks, and lows over the previous cycles (Source: BMPro)
"Historical price analysis suggests that Bitcoin’s current trajectory is strikingly similar to previous cycles. From its lows, Bitcoin usually takes around 24-26 months to break past previous highs. In the last cycle, it took 26 months; in this cycle, Bitcoin’s price is on a similar upward trajectory after 24 months. Bitcoin has historically peaked about 35 months after its lows. If this pattern holds, we may see significant price increases through October 2025, after which another bear market could set in". (BMPro)
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