Options traders dealing with Bitcoin have set their sights on a $110K target by the end of March, with an increased number of bets signaling bullish sentiment. However, industry experts warn of potential obstacles ahead, including a possible extended period of sideways movement and potential losses for traders.
Amberdata, an options analytics platform, reported a surge in activity with traders doubling down on $110K March calls last month. Despite the heightened optimism, the firm raised concerns about the sustainability of these positions and the risks involved.
“The buying of March $110k calls has seen significant activity this month, indicating growing bullish sentiment. However, there are fears that volatility buyers may be overexposed and face potential losses in the near future,” stated a representative from Amberdata.
Greg Magadini of Amberdata attributed the current sideways trend to negative news surrounding meme-coins and Bitcoin’s subdued response to positive developments, such as the significant investment from Abu Dhabi in BlackRock’s IBIT.
“Bearish meme-coins like $Libra and the increasing supply of alternative cryptocurrencies have created a drag on the market, leading to a stand-still. This reinforces the thesis of a sideways market with lower volatility,” Magadini explained.
BTC’s Price Stability
QCP Capital, a prominent crypto options desk, echoed concerns about the prolonged sideways movement in Bitcoin’s price range. Their market update highlighted a cautious approach taken by traders, focusing more on near-term strategies like selling volatility and range trading rather than anticipating a major price breakout.
“The current market sentiment mirrors the range-bound price action seen in Q2-Q3 of last year, indicating a reluctance to take on decay, especially at low volatility levels. Traders are exercising caution and avoiding high-risk positions,” the update from QCP Capital noted.
Further reinforcing the bearish sentiment, crypto analyst Mathew Hyland pointed out a potential bearish divergence in Bitcoin’s dominance in the market, suggesting a decline in BTC’s market share in the near future.
As of the latest update, Bitcoin is trading at around $95K, remaining below the $100K mark for almost two weeks. Additionally, a risk-averse sentiment is evident in the outflows from U.S. spot ETF products, totaling $585.65M in the past week. The lackluster demand for these products may act as a barrier to Bitcoin’s recovery efforts in the short term.