As Bitcoin once again trends up towards $40,000, some are looking at options activity as a catalyst for further value increases.
After spiraling up to an astounding $41,000 in recent days, Bitcoin’s value slumped back down to near $30,000. It’s whipsaw volatility in a digital asset that not too long ago was crawling steadily along under $10,000 per coin. Traders and investors have seen a dramatic increase the likes of which would constitute a black swan event on the equities market – everyone has their own opinion on exactly how this is working, and what factors drive the rapid and sometimes exponential changes.
Today at Coindesk, Omkar Godbole is suggesting that options choices are having an effect on Bitcoin values.
It appears from the evaluation of spot markets that there’s a 20% chance of Bitcoin exceeding $50,000 by the end of January.
That in turn is leading some analysts to suggest that Bitcoin’s bull market will continue.
“The 20% probability of Bitcoin rising above $50,000 by Jan. 29 looks impressive, considering the monthly expiry is just two weeks away, and the cryptocurrency is currently down 31% from $50,000,” Godbole writes. “The likelihood of Bitcoin rising above a certain level on or before the expiry is positively correlated to the time left for expiry. While a 31% rally to $50,000 in two weeks may be challenging to envision, it is far from impossible, as noted by Deribit Insights. The cryptocurrency has charted more significant moves in the recent past. For instance, prices rose 52% from $19,000 to $29,000 in the last two weeks of December alone.”
Options calculated according to the Black-Scholes formula are promoted by exchanges like the aforementioned Deribit. There’s also the inflows into funds like the Grayscale Bitcoin Trust as traders consider Bitcoin a safe haven from a battered equities market.
Will Bitcoin deliver? As a trader, you can make bets on trending value through the charts, or you can consider whether there is more institutional buy-in for Bitcoin around the corner and how far blockchain will take us into a new world of finance.
