- Bitcoin recently hit an all-time high as demand rises for spot Bitcoin exchange-traded funds (ETFs), leading traders to question if it can reach $80,000 soon.
- Some think Bitcoin is an inflation hedge against US monetary policy, but inflation could also hurt Bitcoin if the Fed hikes rates, causing investors to seek safety in cash.
- Bitcoin futures open interest reached $35 billion on March 13, showing increasing confidence, and options metrics confirm trader optimism without severe liquidation risk for now.
Bitcoin recently hit an all-time high, fueled by increasing demand for spot Bitcoin exchange-traded funds (ETFs). Traders are questioning whether Bitcoin can reach $80,000 soon, as professional traders continue adding bullish leveraged positions.
Is Bitcoin Being Used as an Inflation Hedge?
Some analysts argue Bitcoin is being used as a hedge against US monetary policy, especially following the high Consumer Price Index (CPI) increase in February. This may limit the Fed‘s ability to cut rates, raising recession risk. However, if inflation accelerates and the Fed hikes rates, this could hurt Bitcoin too, as investors seek safety in cash.
Leverage and Confidence Rising
Bitcoin’s aggregate futures open interest reached $35 billion on March 13. Also, top traders at crypto exchanges added leverage longs. This shows increasing confidence, but doesn’t necessarily imply high crash risk yet. The increased leverage could reflect temporary demand driven by ETF inflows.
Options Markets Show Moderate Optimism
Bitcoin options metrics confirm traders are confident, but not overly optimistic. The 25 delta skew is currently negative, meaning call options only trade at a small premium to puts. This suggests futures leverage doesn’t imply severe liquidation risk for now.
Conclusion
While Bitcoin surpassing $80,000 soon is uncertain, derivatives data indicates confidence without excessive optimism. Traders are pricing similar risks for upside and downside moves.
