Key Points
- Bitcoin options traders are increasing bets on $110K and $115K price targets by January 2025.
- Despite bullish sentiment, leverage risk could lead to significant price volatility.
Despite volatility predictions around the $100K mark, options traders for Bitcoin are placing larger bets on the cryptocurrency reaching price targets of $110K and $115K by January 2025. The majority of traders have purchased more call options for a $115K price target by the end of January 2025, according to recent insights from options exchange Deribit.
As of the time of reporting, the largest options expiries by Open Interest (OI) were set for December 2024 and March 2025. Kelly Greer of Galaxy Digital highlighted that around $4B in OI was being wagered on Bitcoin’s price hitting $100K and $110K by the end of 2024 or the first quarter of 2025.
Aggressive Bets and Leverage Risk
With Bitcoin recently reaching $100K, there have also been aggressive bets placed on a $120K target. However, despite the optimistic outlook from the options market, Bitcoin could face significant price fluctuations due to high-leveraged players and greed.
JA Martunn of CryptoQuant has attributed the recent flash crash from $104K to $90.5K to leverage. Martunn noted that leverage-driven pumps present significant risk, as the price surge is fuelled by leverage. He stated that open interest rose by over 15%.
Historically, leverage-driven rallies have resulted in sharp pullbacks for Bitcoin and local tops. They also trigger significant volatility as leveraged positions are liquidated, intensifying price swings. The recent Bitcoin flash crash exposed the broader market to $1B worth of liquidations.
Jake Ostrovsksis, an options and OTC trader at market maker Wintermute, warned that the Bitcoin market was susceptible to two-way volatility. He stated that despite the strong flow and continued blocking of the topside, the significant use of leverage left the market vulnerable to volatility in both directions.
Despite the bullish sentiment in the options market, the market could still experience a price swing of +$10K in either direction, similar to what happened on December 5. Bitcoin’s price has returned to its short-term ascending channel that has been present since mid-November. However, it remained below a key obstacle at $98K. A surge above this could push it to the mid-range and the short-term upside target of $105K.
On the other hand, a breach below the channel could push the cryptocurrency down to recent lows at $90.5K or even $85K.
