Institutional traders are betting on Bitcoin’s rise to $ 75,000 and above, CoinDesk writes, citing data from the options market.
“On Monday, the OTC market saw trades in accordance with a bullish call spread strategy with strikes of $ 75,000 and $ 100,000 and expiration on May 28,” reports analytical platform Laevitas. “These could be institutions that are betting on Bitcoin going up to at least $ 75,000 by the summer.”
The bullish call spread strategy is to buy and sell call options with one expiration date. At the same time, the contracts being sold must have a higher execution price. So, on Monday, the trader bought 100 call contracts with expiration on May 28 and a strike of $ 75,000, and sold – 100 of the same contracts with a strike of $ 100,000. Bitcoin at that time was trading at around $ 48,721.
The cost of the operation for the trader was 4.75 BTC, which will become his marginal loss if bitcoin is traded below $ 75,000 on May 28. The costs would be significantly higher if he only bought contracts.
“The goal of the call spread is to take a bullish position while cutting costs,” explained Laevitas.
While the spread has helped reduce losses, it also limits the ROI to 20.25 BTC. A trader will receive the maximum profit if the contracts are settled around $ 100,000 or more. Several other call spreads were opened on Monday with strikes ranging from $ 52,000 to $ 100,000.
The data indicates that institutions were not intimidated by the recent drop in the price of bitcoin. At the same time, LMAX Digital strategist Joel Kruger argues that the rollback may not be over yet.
“We believe that the biggest risk for bitcoin in the short term right now is associated with the decline in the US and global stock markets. There is still room for weakness, so it is worth being careful with assumptions about the formation of a low, ”he said.