Options Market Keys To Push Bitcoin Back To $ 50,000?

Bitcoin price recovery after the September 7 crash was a little more difficult than expected. However, the real reason for the chain of events that led to the 14.69% decline also determines how Bitcoin can survive again.

What happened on September 7th?

For the past 7 days, the entire market has been in a turmoil. This pushed the price down, led to FUD (Fake News “partnership” between Litecoin-Walmart) and more and more investors waiting for their losing positions to be converted back into profits.

While this crash clearly affected the market, many people fail to realize that it was triggered once BTC hit $ 52,000.

Bitcoin down 14.69% | The source: TradingView

When Bitcoin hit that point, it marked a local high and hit a 4-month high. This development raised some concerns that the price might correct itself soon and then sparked mass liquidations.

In line with the dominance of long liquidation, there was a short liquidation squeeze on the market shortly before the sell-off. This compression made up 80% of all liquidations during this period.

The very next day, long liquidations soared to 68% and BTC lost $ 10,000 shortly thereafter.

Dominate long liquidation in Bitcoin futures | The source: Glass knot

This also helped the perpetual futures market’s open interest (OI) drop by more than 30% as contracts worth $ 4 billion were closed in 1 hour. At the time of writing, the open interest is around $ 9 billion versus $ 13 billion.

Open Interest for Bitcoin Perpetual Futures | The source: Glass knot

During this time traders saw this as an attractive opportunity and hedged their positions. The increase in option volume during the sell-off has shown constant movements since March, with the volume this time hitting $ 1.3 billion.

Bitcoin Options Contract Volume | The source: Glass knot

Where is Bitcoin headed?

With the above-mentioned declines, the funding rate also fell, but only for a short time, only to then rise again into positive territory. However, this time the financing rate is significantly lower than during the recovery phase after the crash in May.

Funding Rate Perpetual Bitcoin Futures Contract | Source: Glassnode

Crucially, Bitcoin will benefit from the increased positive sentiment, as there are over 12.9k and 13.4k contracts of $ 50,000 and $ 100,000, respectively.

Bitcoin Open Interest at the strike price | The source: Crookedness

However, given the price movement and network performance, $ 50,000 seems more likely right now.

Although the probability that BTC will hit that price this month is only 21%, 45,000 calls and 25,000 puts expiring on September 24th give us a clearer picture.

Expiry of the Bitcoin option contract | The source: Crookedness

Can the market peak this year?

Renowned strategist Nicholas Merten doesn’t think markets will peak in 2021.

While other enthusiasts claim the current cycle will end soon, with Bitcoin prices hitting $ 100,000 by the end of the year, Merten believes the market cycle is “mumbling and going on longer,” predicting the current cycle will not go until November or December 2022 at the earliest last .

“I think it’s a reasonable high and could bring total market cap to $ 10 trillion – five times more than it is now. I see this level as not too far away and the right time to create new reviews, as crypto is really reaching the mainstream and bringing institutions on board. “

Total market capitalization of $ 10 trillion. The source: Nicholas Merten

Total market capitalization at press time is $ 2.12 trillion. If Bitcoin’s market share remains constant in this space, a five-fold increase would push the price above $ 200,000 by the end of next year.

Merten also predicts that total market capitalization will gain some momentum in the “coming months” as it is “in the best part of a bull market”.

“The important thing is that the altcoin market capitalization grows … This is reassurance for me that the market is not currently in a bear market. That is altcoin dominance. “

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