Options market participants do not rate the odds of Bitcoin rising above $ 100,000 this year too highly, despite massive expectations of the rally continuing after Tesla bought the cryptocurrency. According to the Skew platform, options now have a 12 percent chance of BTC hitting a seven-digit range by the end of December. The likelihood of a rise above $ 70,000 is estimated at 21%.
“Given the extreme volatility over the past two months, the market hasn’t shown much confidence in how Bitcoin will trade for the rest of the year,” CF Benchmarks CEO Su Chun told CoinDesk.
Option probabilities are calculated using the Black-Scholes formula, taking into account metrics such as call price, strike price, and underlying asset price. Some market participants, however, believe that options, in this case, underestimate the likelihood of further growth in the bitcoin rate.
“Prices can go up very high. I expect other big companies to follow Tesla’s lead, ”said analyst Alex Kruger.
According to Chun, market participants are now not paying attention to the historical context that suggests the possibility of a further rise in bitcoin after last year’s halving, and instead are more interested in other large-cap cryptocurrencies.
“Very bullish positioning for ETHUSD futures. They trade at a premium of 2.6% relative to the spot price, while Bitcoin has only 1.7%. This is due to the emergence of new trading opportunities, for example, with the recently launched futures on the Chicago Mercantile Exchange (CME), the volume of transactions for which in one day amounted to over $ 30 million, ”he explained.
The options market is also prone to error. For example, during the first 10 months of 2020, the probability of a rise above $ 20,000 by the end of December was estimated at less than 10%, but the cryptocurrency ended the year with a rise to $ 39,000. Traders will reassess the probabilities if Bitcoin is able to make a confident breakout of the $ 50 level in the near future. 000.
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