Bitcoin sentiment has spiked lately as open interest reached all-time highs. (Photo by Joe … More
Investor sentiment surrounding bitcoin has spiked recently as the total notional interest in futures tied to this digital currency has climbed, reaching an all-time high over the last several days, according to market analyst Greg Magadini.
The fact that open interest in these derivatives contracts rose to record levels while bitcoin prices were trending upward is a sign that markets are feeling quite bullish about the digital currency, Magadini, director of derivatives for digital asset data provider Amberdata, said via Telegram.
The chart below shows bitcoin’s open interest climbing to an all-time high:
This chart shows how the open interest in bitcoin futures reached an all-time high recently.
Past that, the open interest for futures contracts in the broader crypto market have also been showing quite a bit of strength recently, pushing to new records, Magadini added.
The chart depicted below helps illustrate these developments in the overall digital currency markets:
Total open interest for futures contracts tied to the overall crypto markets has reached record … More
May Expiry
On Friday, May 30, billions of dollars’ worth of bitcoin options are set to expire, according to Deribit data sourced from a recent CoinDesk article, and multiple analysts commented on the potential implications of this development.
“We can see that Friday’s expiration has a large over-hang of positive dealer gamma at $110k the BTC all-time-high area,” Magadini stated via email.
“This means that option market-makers were selling BTC at this level… Which can help explain the sentiment for prices stalling out here.”
The chart below illustrates this situation:
This chart depicts dealer’s gamma profile by expiration, sourced using Deribit data
“That said looking at all expirations, peak gamma for BTC currently stands around $121k suggesting some more upside to be found, although we’ll likely see price quietly move higher without a strong catalyst for an explosive move higher,” said Magadini, commenting on the digital currency’s outlook.
This chart helps depict the situation:
Data on the gamma profile of crypto dealers
Paul Howard, senior director at crypto trading firm Wincent, also chimed in.
“Bitcoin volatility has remained near historic lows, but with the upcoming options expiry, we could see implied volatility begin to climb toward the 45 level,” he stated via email.
“Notably, the price gap below the $90,000 mark (previously identified) has now been filled, reinforcing the bullish case for continued upward momentum in the coming months,” Howard added.
The analyst also weighed in on how bitcoin prices could behave over the coming months based on the digital asset’s market history.
“As we move into the summer period in the Northern Hemisphere, the market liquidity typically thins, contributing to more pronounced price swings. Despite this expected increase in volatility, downside moves below $100,000 appear less probable than an advance beyond the $110,000 level,” Howard emphasized.
“Current options market data shows significant open interest in call options, reflecting a broadly bullish sentiment. Strikes at $112,000 and $115,000 for the current and upcoming expiry cycles are particularly notable, suggesting traders are positioning for further upside in Bitcoin’s price trajectory,” he stated, stressing the positive outlook he has for the digital asset.
