Bitcoin price of $80,000 at end of April appears to be the target for most options traders
Options traders are acting bullish and betting that the bitcoin price will already rise above $80,000 by the end of April. However, according to analytical data, this scenario is quite unlikely.
With events on the horizon such as the highly anticipated Coinbase IPO next month, options traders seem to be betting that the Bitcoin price will continue its upward rally and reach new all-time highs in the coming weeks.
A Bitcoin price in the region of $80,000 has the most money betting on it
On 24 March, the founders of crypto-analysis firm Glassnode tweeted data suggesting that options traders on peer-to-peer crypto derivatives exchange Crypto Bank Deribit are stocking up on contracts with a strike price of $80,000, which expire as early as 30 April. Contracts with this price target have already been bought with a face value of 4,000 BTC, representing over 50% more sales than any other strike price.
This Friday $6 billion in options contracts are set to expire. #Bitcoin price expectations for April are high with lots of investors placing their new bets on $80k. pic.twitter.com/xRipoAaD1F
– Jan & Yann (@Negentropic_) March 24, 2021
However, if the bitcoin price is below $80,000 at the end of April, contrary to the expectations of the options traders, the contracts will expire and be worthless. In order to buy such a contract, options traders must therefore be convinced that the bitcoin price has not yet reached the market peak by a long way.
Skew gives BTC only a 6.19% probability of success
According to data aggregator Skew, probability estimates based on market data for the April 30 contract suggest that options traders may be a little too optimistic. The analytics platform gives it a probability of just 6.19%. Conversely, this means that there is a 93.81% probability that the bitcoin price will be below $80,000 when the options traders‘ positions mature.
Yet price expectations of $80,000 or more are not even the tip of the iceberg. Significant volume has also accumulated around contracts with a strike price of $120,000. This means that some traders believe the bitcoin price will more than double in the next five weeks. However, according to Skew, there is only a 2.15% chance that the bitcoin price will even reach $100,000 by the expiration date on April 30.
Does that make options traders just dreamers with money too loose in their wallets or BTC in their wallets? Of course not. At least not necessarily. Many options traders build up positions over several contracts with different strike prices. This means that not all buyers of contracts with strike prices of $80,000 and $120,000 assume that this price target is likely to be reached. But they give these events a real chance.