- Options traders are making large bets on Bitcoin hitting $50,000 by late January, with massive open interest for $50k call options expiring then
- Key potential catalysts include an expected SEC approval of a Bitcoin spot ETF and Bitcoin’s historical tendency to rebound in Q1 after Q4 bottoms
- Between the demand for $50k call options and positive macro drivers like less hawkish Fed, traders believe conditions align for a huge Bitcoin rally to $50k soon
Bitcoin has seen a major rally over the past couple months, surging more than 60% since mid-October. Now, options traders are making big bets that the cryptocurrency will continue its ascent to $50,000 by late January.
Large Open Interest in $50,000 Call Options for January
According to data from Deribit, the largest crypto options exchange, the price level with the largest open interest is $50,000 for call options expiring on January 26th. Call options give buyers the right to purchase Bitcoin at a specific price before the expiration date. The massive open interest at $50,000 shows traders are expecting prices to reach that level in the next couple of months.
Potential Catalysts for a Bitcoin Surge
Many market observers believe January could mark the beginning of another major bull run for Bitcoin. A key potential catalyst is an expected decision by the SEC to finally approve a Bitcoin exchange-traded fund (ETF) that would hold the cryptocurrency directly. The approval of a spot Bitcoin ETF is seen as a watershed moment that could draw significant new institutional investment into the space.
In addition, Bitcoin has historically seen strong first quarters, with prices often bottoming in Q4 before rebounding sharply. The Federal Reserve’s pivot to less aggressive interest rate hikes has also boosted risk asset prices. With inflation potentially peaking, crypto bulls believe the macro backdrop supports substantially higher Bitcoin prices in early 2023.
Between the heavy demand for call options at $50,000 and the positive fundamental drivers, traders are clearly betting on Bitcoin staging a huge rally in the coming months. While nothing is guaranteed, the crypto markets believe the stars are aligning for Bitcoin to once again reach the coveted $50,000 level. The next few months will determine if this bullish options betting pays off.