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Bitcoin Price Won’t Stay Below $30K for Long, Crypto Options Traders Bet

by Swati Gupta

July 28, 2023 5

The recent dip in Bitcoin’s price below the $30,000 level is not expected to be a prolonged downturn, according to Rachel Lyn, CEO of SynFutures, a decentralized exchange for derivatives. In a note on Friday, Lyn stated that the lack of traders selling $30,000 bitcoin call options suggests that market participants do not foresee the price staying below this level for an extended period.

Bitcoin, the largest cryptocurrency by market capitalization, had been trading above $30,000 for most of July, even reaching a near one-year high of $31,800 earlier this month. Positive catalysts, such as the spot bitcoin ETF application by asset management giant BlackRock and a favorable court ruling on Ripple’s XRP, contributed to the uptrend. However, the bullish momentum waned in recent days, and Bitcoin’s price dipped below $29,000 earlier this week, currently hovering around $29,350.

Despite the brief decline below $30,000, Lyn believes it is likely just a short-term correction within the overall bullish trend. She pointed out that the absence of $30,000 call option selling from bearish traders indicates that they don’t anticipate this level to become significant resistance, at least in the near term.

Lyn highlighted that a crucial price level to watch is $31,000, as it is showing strong open interest for call options. Open interest refers to the number of active options contracts at a particular strike price. In this case, the substantial open interest at $31,000 suggests that it could act as potent resistance if Bitcoin’s price bounces back.

Options are financial instruments that give investors the right to buy or sell an underlying asset at a predetermined price on or before a specified date. Call options allow buyers to purchase the asset, while put options enable selling. Bitcoin traders often utilize call options to make leveraged bullish bets on the cryptocurrency’s price.

Another perspective on optimizing returns during the current period of suppressed crypto market volatility comes from Singapore-based crypto services provider Matrixport. They advise investors to sell spot Bitcoin and instead purchase call options, aiming to capitalize on potential price movements while volatility remains low.

As of now, the CoinDesk Bitcoin Price Index shows Bitcoin trading at $29,350, representing a 1.5% decrease over the past week.

While market sentiment might sway in the short term, Bitcoin’s overall trajectory remains of significant interest to traders and investors. As developments unfold, the cryptocurrency community eagerly awaits the next price movements and the potential impact of external factors on the market