This article is also available in Spanish.
Institutional traders are betting that Bitcoin will rise to $79,300 by the end of November. This sentiment is reflected in recent trading activities on the Chicago Mercantile Exchange (CME), where Bitcoin options have experienced the highest trading volume before the US presidential election.
Bitcoin Will Rise Above $79,300?
Joshua Lim, the founder of Arbelos Markets—a trading company that provides financing for all cryptocurrency derivatives markets—shared details with X about this remarkable trade. “CME Bitcoin options recently had some of its biggest days, before the US election,” Lim said.
He highlighted two major transactions that took place last week. On Friday the 25th, sellers bought 1,875 Bitcoin units of the 29-November 70,000 strike calls. In options trading, a call option gives the buyer the right, but not the obligation, to buy the asset at the specified strike price before the option expires. In this case, the strike price is $70,000, which means that buyers are betting that Bitcoin will surpass this price by the end of November. Lim explained that during the trade, “$8.3 million was paid, $147,000 for vega, $65 million for delta.”
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Then, on Tuesday the 29th, another significant transaction took place with the purchase of 3,050 Bitcoin units of the 29-November 85,000 strike calls, where the strike price is $85,000. Lim noted that “$4.6 million of premium was paid, $173,000 of vega, $42 million of delta” during the trade.
The values ​​of $8.3 million and $4.6 million indicate a large investment, indicating strong confidence in the potential rise of Bitcoin. High vega suggests that traders are expecting big swings, which could be big in the US election. Delta represents how much the option price is expected to change for a $1 change in the price of the underlying asset. The high delta values ​​of $65 million and $42 million suggest significant exposure to Bitcoin price movements.
The total notional value of these positions—the total value of the underlying assets represented by the options—is approximately $350 million. Lim pointed out that this is “huge even in the context of Deribit,” referring to the largest crypto options exchange in the world.
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The breakeven point for these positions is below $79,300. This means that in order for traders to start making a profit, the price of Bitcoin needs to exceed this level by the expiration date of the option. This price represents about a 16% increase from the price of Bitcoin when this trade was made.
“It’s very good for the election, and it’s good to see institutions growing like this in CME,” commented Lim. He added, “Perhaps it is a good sign that there is and will be economic growth in the crypto derivatives market as the asset class grows.”
The timing of this trade is very remarkable. With the US presidential election approaching, market volatility is expected to increase, which could impact the entire Bitcoin and crypto market. Overall, most experts believe that Trump’s victory is bullish for the price of BTC.
At press time, BTC traded at $72,382.
The featured image was created with DALL.E, a chart from TradingView.com
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