The launch of BlackRock’s spot bitcoin exchange-traded fund (ETF) has sparked a surge of optimism among crypto traders, with many betting big on the ETF’s price doubling to $100 in the coming months. The Nasdaq-listed IBIT ETF made a stunning debut on Tuesday, registering a colossal first-day trading volume of $1.9 billion.
According to data from analytics firm ConvexValue, the majority of the activity centered around call options, signaling a bullish bias among traders. The $100 strike call option, in particular, saw a trading volume exceeding 32,000 contracts, with most of the action concentrated in the December 12 expiry.
It’s pretty interesting to see ‘professionals’ degen into $100 strikes (this effectively means a doubling of BTC prices given IBIT trades near $50).
Samneet Chepal, Crypto Quant Researcher
Mirroring Sentiment on Offshore Exchanges
The notable uptake for the $100 IBIT call aligns with the activity observed on offshore crypto options exchange Deribit. There, an astounding $381 million in notional open interest is locked in the $200,000 strike bitcoin call. If these buyers are indeed investors rather than market makers, it suggests a growing anticipation for a potential doubling of the spot price.
It’s worth noting that Tuesday’s most traded IBIT option was the call at the $55 strike, and the overall volume of call options was four times higher than that of put options. This imbalance further underscores the prevailing bullish sentiment among traders.
Potential for Gamma Squeeze
Market participants believe that the stateside demand for calls and the resulting “trend trading” by market makers to hedge their books could set the stage for a gamma squeeze, propelling Bitcoin’s price higher.
U.S. institutions and retail who can’t trade on Deribit, the largest crypto options market, will now be able to enter the space and create more open interest around certain price levels, which can further trigger volatility and gamma squeezes in addition to Deribit.
Luuk Strijers, CEO of Deribit
Implications for the Broader Crypto Market
The bullish activity surrounding BlackRock’s bitcoin ETF could have far-reaching implications for the broader cryptocurrency market. As institutional giants like BlackRock continue to make inroads into the crypto space, it legitimizes the asset class and attracts more mainstream investors.
Moreover, the growing interest in crypto derivatives, as evidenced by the high trading volume in IBIT options, suggests that sophisticated investors are becoming increasingly comfortable with navigating the complex world of digital assets.
Cautious Optimism Remains Key
While the bullish sentiment is palpable, it’s crucial for investors to exercise caution and not get carried away by the hype. The cryptocurrency market is notorious for its volatility, and even seemingly promising developments can quickly fizzle out.
That being said, the launch of BlackRock’s spot bitcoin ETF and the subsequent surge in call option activity provide a compelling narrative for those hoping for a sustained bull run. As always, time will tell whether these bets pay off or if the market has other plans in store.
For now, all eyes remain on IBIT and the wider crypto market, as traders eagerly await the next chapter in this fascinating and ever-evolving story.
While the bullish sentiment is palpable, it’s crucial for investors to exercise caution and not get carried away by the hype. The cryptocurrency market is notorious for its volatility, and even seemingly promising developments can quickly fizzle out.
That being said, the launch of BlackRock’s spot bitcoin ETF and the subsequent surge in call option activity provide a compelling narrative for those hoping for a sustained bull run. As always, time will tell whether these bets pay off or if the market has other plans in store.
For now, all eyes remain on IBIT and the wider crypto market, as traders eagerly await the next chapter in this fascinating and ever-evolving story.
