In a significant development for the cryptocurrency market, Bitcoin (BTC) has topped the $80,000 mark during North American hours. This milestone comes on the back of rising futures premiums, indicating a strong bias towards bullish bets. The surge in prices is also reflected in the popularity of the $80,000 call option on Deribit, which suggests potential dealer hedging around this key level.
Bitcoin Price Breaks Above $80,000
As traders scrambled to add bullish exposure in derivatives linked to the leading cryptocurrency, Bitcoin rose past $80,000. The price set a new high of $80,095, taking the cumulative weekly gain to 15%, the highest since February, according to CoinDesk data. This surge in prices has largely occurred since Donald Trump won the U.S. election held on Thursday, raising hopes of regulatory clarity for the digital assets industry.
Futures Premiums Surge
The annualized rolling premium in three-month bitcoin futures listed on prominent exchanges Binance and Deribit has surged alongside the price, topping 14% for the first time since June, according to data source Velo. The so-called futures basis on the CME rose past 10% on Friday. This uptick in premiums reflects a bias towards bullish bets and may entice carry traders looking to profit from price discrepancies between the two markets.
Carry Traders Take Notice
The surge in futures premiums is likely to attract the attention of carry traders, who seek to profit from price differences between spot and futures markets. With the CME basis rising above 10%, these traders may be tempted to take advantage of the premium by buying or selling bitcoin futures contracts.
Deribit Data Paints a Picture
Data tracked by Deribit shows that open interest in the $80,000 strike BTC call has increased above $1.6 billion. This surge in demand for the $80,000 call option suggests that traders have been piling into this instrument since before the U.S. election, anticipating a breakout before the end of year-end.
Options Open Interest Distribution
BTC options open interest distribution on Deribit reveals some interesting insights. The $80,000 strike has the most negative gamma, which means that volatility could increase sharply once prices reach that level. Holding negative gamma means holding a net short exposure at a specific level, and concentration of negative gamma at $80,000 suggests that dealers or entities tasked with providing liquidity to order books may buy the potential breakout above $80,000.
Adding Fuel to the Fire
The surge in futures premiums and open interest in the $80,000 strike BTC call has added fuel to the fire. With traders piling into this instrument, it’s likely that dealers or entities tasked with providing liquidity will also take notice. This concentration of negative gamma at $80,000 means that these market participants may buy the potential breakout above $80,000, adding to bullish volatility in the market.
Conclusion
In conclusion, Bitcoin’s surge past $80,000 is a significant development for the cryptocurrency market. The rising futures premiums and open interest in the $80,000 strike BTC call suggest a strong bias towards bullish bets. As traders continue to pile into this instrument, it’s likely that dealers or entities tasked with providing liquidity will also take notice, adding fuel to the fire.
Key Takeaways
- Bitcoin has topped the $80,000 mark during North American hours.
- Futures premiums have surged alongside the price, topping 14% for the first time since June.
- Open interest in the $80,000 strike BTC call has increased above $1.6 billion.
- Concentration of negative gamma at $80,000 suggests that dealers or entities tasked with providing liquidity may buy the potential breakout above $80,000.
What’s Next?
As Bitcoin continues to break new ground, it will be interesting to see how traders and market participants respond. Will the surge in futures premiums and open interest continue to fuel the price rise, or will there be a correction? Only time will tell. One thing is certain: the cryptocurrency market is always evolving, and events like this one are sure to shape its future.
References
- CoinDesk data
- Velo data
- Deribit data
- Amberdata data
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