While option traders have increased bets on Bitcoin reaching $110,000 by March, analysts caution against an extended sideways market and potential losses.
Option traders have significantly increased their bets on Bitcoin (BTC) rallying to $110,000 by the end of March. This bullish sentiment is reflected in the surge of buying for March $110,000 call options, as reported by the Options analytics platform Amberdata. However, analysts remain cautious, predicting an extended sideways market structure and potential losses for overly optimistic traders.
Amberdata's Greg Magadini highlighted the recent surge in buying of March $110,000 calls, stating that he believes volatility buyers will likely experience losses. He attributes this prediction to several factors, including bearish headlines surrounding meme-coins, and Bitcoin's lackluster response to recent bullish developments, such as Abu Dhabi's substantial bid on BlackRock's IBIT. Magadini further explained that the bearish drag from memecoin market events like the recent decline of $Libra, coupled with pump-and-dump schemes and the increasing supply of alternative cryptocurrencies (alts), will likely result in a stagnant market characterized by lower volatility.QCP Capital, a prominent global crypto options desk, echoed the sentiment of an extended price range for Bitcoin. Their daily market update observed that the market remains hesitant to commit to any significant direction even at low volatility levels. This indecision is reminiscent of Bitcoin's range-bound price action observed in the second and third quarters of last year. Instead, trading flows are predominantly focused on near-dated volatility selling and range trading strategies rather than positioning for a major breakout. Crypto analyst Mathew Hyland also noted a bearish divergence in the weekly chart, suggesting a potential decline in Bitcoin's market dominance. Despite the bullish option bets, Bitcoin was trading around $95,000 at press time, remaining below the $100,000 mark for almost two weeks. This risk-off sentiment has also been observed across U.S. spot ETF products, which witnessed combined outflows of $585.65 million in the past week. The subdued demand from these ETF products could potentially cap Bitcoin's upward movement in the near term.
BITCOIN OPTIONS TRADING MARKET ANALYSIS SIDEWAYS MARKET VOLATILITY
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