Investor sentiment towards Bitcoin has recently increased, with total open interest in futures linked to this digital currency reaching an all-time high in the past few days, according to market analyst Greg Magadini.
Magadini, Director of Derivatives at Amberdata, a digital asset data provider, added via Telegram: "The rise in open interest in these derivatives to record levels, alongside rising Bitcoin prices, is a sign of market optimism for the digital currency."
Furthermore, Magadini added that open interest in futures in the broader cryptocurrency market has shown remarkable strength recently, recording new all-time highs.
The chart below illustrates these developments in cryptocurrency markets in general:
■ Expiration of Bitcoin options in May
On Friday, May 30, billions of dollars in Bitcoin options are set to expire, according to Deribit data derived from a recent CoinDesk article, and several analysts have commented on the potential implications of this development.
Magadini stated via email: "We see Friday's expiration carrying a significantly positive impact on traders' gamma at the $110,000 level, which is the historical all-time high for Bitcoin price."
"This means that options market makers have been selling Bitcoin at this level... which may explain the price stagnation here."
However, looking at all expirations, Bitcoin's gamma peak is currently around $121,000, indicating the possibility of finding more upward movement, although we are likely to see the price move quietly upwards without a strong catalyst for a explosive upward move," said Magadini, commenting on the digital currency's outlook.
As Paul Howard, Senior Director at Vincent Cryptocurrency Trading Company, commented: "Bitcoin volatility is still close to its historical lows, but as the expiration of options approaches, we may see an increase in implied volatility towards the 45 level."
Howard added: "It is worth noting that the price gap below the $90,000 level (previously identified) has now been filled, reinforcing expectations for continued bullish momentum in the coming months."
The analyst also touched on how Bitcoin prices may move in the coming months based on the historical market of this digital currency.
As summer approaches in the Northern Hemisphere, market liquidity typically decreases, contributing to more pronounced price volatility. Despite this expected increase in volatility, it seems that a drop in price below $100,000 is less likely than a rise above $110,000, Howard confirmed.
He added: "Current options market data shows significant open interest in call options, reflecting a broad bullish sentiment. Reaching $112,000 and $115,000 for the current and upcoming expiration cycles is particularly notable, indicating that traders are positioning themselves for further increases in Bitcoin's price path," emphasizing his positive outlook for this digital asset.