Bitcoin options traders are positioning for the asset to hit new record prices this month, driven by strong bullish activity and significant call buying for June expiries.

“Our desk saw strong bullish follow-through with significant call buying for June expiries, indicating positioning in the options market for a decisive break of 74,000 all-time-highs this month,” digital asset hedge fund QCP said in a Wednesday market update. 

Options are derivative contracts that grant buyers the right to buy or sell an asset at a specific price before or at a predetermined date. If the underlying asset doesn’t reach the strike price, the option expires worthless. Buying calls suggests a bullish outlook, while put option buyers are bearish.

“Options flow was clearly bullish today with big sizes on long BTC out-of-money call spreads at the end of June and, to a lower extent, at the end of July,” said institutional crypto derivatives trading network Paradigm in a Telegram broadcast.

Joshua Lim, co-founder of crypto derivatives principal trading firm Arbelos Markets, noted “very concentrated call buying” on Tuesday with about 1,100 contracts purchased of June 28 expiration call spreads in $74,000-$80,000 strikes, representing around $80 million notional demand. 

A call spread involves buying call options at a lower strike price while selling the same amount of calls at a higher strike price with the same expiry, aiming to profit from a limited price increase.

Bitcoin has been consolidating for nearly three months since reaching an all-time high just below $74,000 in mid-March. After briefly dropping below $57,000 in early May, it has steadily recovered, currently trading around $71,000, only a few percentage points from new record prices.

Crypto investment services firm Matrixport stated in a Wednesday post that Bitcoin “appears to be ready to squeeze higher,” supported by heavy inflows to U.S. spot Bitcoin exchange-traded funds and rising open interest in the futures market. 

Matrixport highlighted that a surge above the $72,000 level could trigger a short squeeze. There is approximately $1.5 billion worth of leveraged futures contracts betting on lower prices around this range that could be liquidated, intensifying the move higher.

SOURCE: Bitcoin Options Traders Anticipate Imminent Breakout Above $74K to New Record Prices