Forecasts from options traders suggest a target of $120,000 for Bitcoin (BTC) by the end of March. However, prevailing institutional market trends and broader economic challenges may hinder the realization of this projection.
In its latest weekly report, Amberdata, a Crypto Options analytics company, highlighted persistent U.S. inflation as a near-term concern for BTC and the broader market. The report noted,
“This week, we anticipate more insights on inflation through the PPI on Tuesday and CPI on Wednesday. A robust economy coupled with rising inflation could negatively impact bond markets, subsequently affecting stocks and other risk assets.”
The recent market correction and BTC’s revisit of lower price ranges were triggered by mounting expectations of fewer Federal Reserve interest rate cuts going forward. It was observed that the markets had priced in a nearly 98% probability of no change in the next Fed rate decision scheduled for January 31.
Analysts from Coinbase have also expressed a cautious stance, citing macroeconomic conditions and supply pressure from long-term holders. They suggested that BTC’s upward potential might be constrained in the short run.
Bitcoin’s Target of $120,000
The anticipation of BTC surpassing $100,000 hinges significantly on potential favorable policy actions by President-elect Donald Trump, including the establishment of a strategic BTC reserve. Nevertheless, Amberdata warned that such policy updates may already be factored into the market. Additionally, institutional traders have been speculating on a potential drop in BTC price to $55,000, which could delay the $120,000 target.
“Analysis of significant block trades indicates that institutional traders are theoretically optimistic about Bitcoin prices; however, instead of purchasing call options, they are selling put options for March and June with a strike price of $55,000, thus betting against volatility rather than in favor of it.”
Put options are typically utilized by major players to hedge against downside risks, indicating a bearish sentiment. Amberdata suggested that opting to sell puts instead of buying them could dampen implied volatility, potentially leading to reduced price fluctuations and a limited upward surge towards $120,000.
As of the latest data, BTC had surged past the $95,000 mark, driven by liquidity accumulation around $96,000. Further liquidity zones were identified at $99,000 and $90,000, which could play a role in shaping future price movements.