Bitcoin options traders predict an imminent breakout above $74,000 to new record prices

• Options trading desks have seen heavy buying activity on BTC calls expiring in June.

• BTC “is poised to squeeze higher” with about $1.5 billion of shorts concentrated around $72,000 that can be liquidated, Matrixport noted.

Bitcoin {{BTC}} options traders are increasingly positioning themselves for the asset to hit new record prices this month, market data suggests.

“Our desk saw strong bullish follow-through with significant call buying for June expirations, indicating positioning in the options market for a decisive break of 74,000 all-time highs this month,” digital asset hedge fund QCP said in a market update on Wednesday.

Options are derivative contracts that give buyers the right to buy or sell an asset at a certain price before or at a predetermined date of expiration of the contract. If the underlying asset does not reach the strike price (out of money), the option will expire worthless. Buy calls imply a bullish outlook for an asset’s price, while put option buyers are bearish.

“Options flow was clearly bullish today with large size on BTC OTM long [out-of-money] call spread in late June and, to a lesser extent, late July,” institutional crypto derivatives trading network Paradigm said in a Telegram broadcast.

Joshua Lim, co-founder of leading crypto derivatives trading firm Arbelos Markets, noted “very concentrated call buying” on Tuesday with around 1100 contracts purchased with call spreads expiring on June 28 in strikes of $74,000 to $80,000, representing approximately $80 million in notional demand.

A call spread is an options trading strategy in which purchases of call options at a lower strike price are made alongside sales of the same amount of calls at a higher strike price with the same expiration, with the goal of profit from a limited price increase.

Heatmap of Bitcoin options on Deribit (Deribit via Arbelos Markets)

Bitcoin has spent nearly three months consolidating since hitting an all-time high slightly below $74,000 in mid-March. After briefly collapsing below $57,000 in early May, it has seen a steady recovery, now changing hands at around $71,000, just a few percentage points away from new record prices.

Cryptocurrency investment services firm Matrixport said in a Wednesday X post that bitcoin “appears poised to move higher,” supported by strong inflows into U.S. bitcoin spot exchange-traded funds and growing open interest in the futures market.

A rise above the $72,000 level could prompt a short squeeze, Matrixport noted, as there are about $1.5 billion in leveraged futures contracts betting on lower prices concentrated around that range that could be liquidated, exacerbating the upward movement.

Source