Pushing Bitcoin to $100,000: Insights from Derivatives Traders on Future Developments
As bitcoin edges closer to the psychological barrier of $100,000, derivatives traders are keeping a close eye on potential signals that could signal the final push upward, and they're already adjusting their positions for what may come next.
At the time of this writing, bitcoin's price lingers just below $98,000, and traders are on the edge of their seats, waiting for it to break the $100,000 barrier for the second time in crypto history.
According to derivatives experts Gordon Grant and Joshua Lim, the current move towards six figures lacks the frenzied energy of past rallies, such as the one after Trump won the US general election in November 2016. Yet, this might be a good thing.
Grant explained, "This current bounce back feels much more of a low-key, lethargic reclamation of those highs...The positioning rinsedown through all key moving averages...was a proper washout." He added that this washout, a sharp sell-off that flushed out weak hands, cleared the way for a healthier rebound.
In Grant's view, this sets the stage for bitcoin to achieve a more significant and lasting climb through the $100,000 mark, potentially taking it towards the $110,000 peak it touched around the time of the US inauguration earlier this year.
However, several key elements must fall into place in the derivatives market for bitcoin to shoot higher. One of these elements is controlled volatility. Volatility measures the extent and speed of bitcoin's price changes. A bullish scenario favors stable or gradually rising prices over wild swings.
Traders who sell options on bitcoin volatility now show a calmer demeanor than during January's price surge. Grant noted, "Current complacency among vol sellers in fading the technical threshold at $100K is markedly different."
Grant also pointed out that back in December, volatility spiked on expectations of a rapid moonshot toward $130,000-$150,000. Now, however, implied volatility has actually fallen by around 10 points during the final 10% of bitcoin's climb—an unusual dynamic that has penalized traders holding out-of-the-money options who were betting on significant price swings.
The substantial loss of market optimism also contributes to the situation. As Grant put it, "Whereas BTC on first launch to/through $100K was accompanied by euphoria about presidential policies...the re-approach has been marred by malaise."
In short, the motivation to buy may now be driven more by fear than greed. Joshua Lim, Global Co-Head of Markets at FalconX, concurred with this analysis, highlighting a significant shift in the primary source of bitcoin demand.
"The dominant narrative is more around Microstrategy-type equities accumulating Bitcoin, that's more consistent buyers than the retail swing traders," Lim told BeInCrypto.
The recent formation of 21 Capital, backed by mega companies like Tether and Softbank, further confirms this shift in motivation. Consistent institutional buying can also sustain an increase in bitcoin's price over time.
The focus is now shifting from the thrill of bitcoin hitting $100,000 to its role as an increasingly integral component of the financial system. The potential for bitcoin to serve as a means of risk reduction against issues like inflation or currency devaluation is growing, as more corporations view it as a legitimate treasury asset.
In summary, the path to $110,000 for bitcoin will be influenced by several factors in the derivatives market, including market infrastructure and regulatory clarity, institutional demand and risk management, controlled volatility, and regulatory-commercial alignment. Successful convergence of these factors could lead to increased liquidity, stabilized price discovery, and incremental inflows, key drivers for bitcoin's next leg toward $110,000.
- Despite bitcoin approaching the $100,000 mark, the current rally lacks the intensity of past ones, according to derivatives experts.
- Grant believes this washout, a sharp sell-off, has cleared the way for a healthier rebound, potentially taking bitcoin towards $110,000.
- Controlled volatility is a crucial element for bitcoin to shoot higher, as volatility measures the speed and extent of its price changes.
- The motivation to buy bitcoin now seems to be driven more by fear than greed, a significant shift from the euphoria during its first climb to $100,000.
- The dominant source of bitcoin demand is now more institutional, such as companies like Microstrategy, with consistent buying helping sustain its price increase.
- The focus is shifting from the thrill of bitcoin hitting $100,000 to its role as a component of the financial system, with corporations viewing it as a legitimate treasury asset.
- The path to $110,000 for bitcoin will be influenced by various factors, including market infrastructure, institutional demand and risk management, controlled volatility, and regulatory-commercial alignment.
