FOMO Fuels Bitcoin’s 35% Jump, Options Flow Hints At Bigger Upswing
February 29 2024 - 6:00PM
NEWSBTC
The price of Bitcoin seems on the brink of blasting past its
all-time high (ATH) at the high area of its current levels. The
cryptocurrency has been on a bull run due to the launch of spot
Bitcoin Exchange Traded Funds (ETF), which officially onboarded
institutions to the nascent sector. Related Reading: Shiba Inu
(SHIB) Price Skyrockets By 28%: 4 Key Reasons As of this writing,
Bitcoin (BTC) trades at around $62,900 with a 3% profit in the last
24 hours. In the previous week, the cryptocurrency recorded a
critical 22% profit. It stood as one of the three top gainers in
the top 10 by market cap, only surpassed by Solana (25%) and
Dogecoin (57%) in the same period. Bitcoin-Based Derivatives Hint
At Further Gains Data from the derivatives platform Deribit
indicates a spike in long positions by Options operators. Since
early February, these traders have accumulated important call (buy)
contracts with a strike price above $65,000. At first, as the
report indicates, the increase in bullish positions was thought to
be part of a Bitcoin “Halving” strategy. However, the BTC ETF Flows
seem to be the key component behind the rally. As cryptocurrency
entered the $60,000 area, several operators rushed to accumulate
call contracts, leading to a Fear Of Missing Out (FOMO) rally to
its current levels. The chart below shows that the FOMO buying
began when BTC breached the $57,000 level. The spike in trading
activity during yesterday’s session led to a significant jump in
Implied Volatility (IV). Overleveraged positions further propelled
the metric, Deribit stated: The 62k to 64k surge was so quick, and
with high leverage across the whole system, that when sales hit the
market a cascade sent BTC down to 59k in 15mins, and some Alts
(also massively leveraged) dropped 50% on some exchanges before
promptly bouncing as BTC jumped to 61.5k. As the market continues
to experience sudden moves due to the high IV, there is little
change in the market structure in the derivatives sector. In other
words, Deribit still records a lot of bullish positions for the
coming months, which suggests optimistic conviction by these
players. BTC Price On The Short Timeframe Despite the bull run, the
Bitcoin price could dip as euphoria takes over the market.
According to economist Alex Krüeger, the spike in trading volume
across the derivatives sector indicates the formation of a “local
top.” The analyst believes that retail has returned to the market
driven by FOMO, which often hints at short-term predicaments for
long traders. Krüger predicted further gains into the $70,000 area
via his official X account and then a drop into the $55,000 area.
Related Reading: Dogecoin Rallies 50% To Beat Out Avalanche, BONK
Overtakes PEPE The analyst stated: ATH are inches away. That’s
price discovery territory. Thus very easy for things to get even
crazier. This is just not where one opens new longs. Too easy to
get a quick flush out of nowhere. Ideally we see funding cool down
and price consolidate below ATH then break out. Cover image from
Dall-E, Chart from Tradingview
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