Despite optimistic forecasts for a bullish Q4 and end-of-2024 rally for Bitcoin [BTC], the options market appears to be maintaining a cautious stance.
Jeff Park, the head of alpha strategies at Bitwise, indicated that options markets were currently assigning a mere 10% probability of BTC hitting the $85,000 mark by the year’s end.
Deribit’s 12/27 contracts now imply only approximately a 10% chance of BTC reaching $85,000 by the end of the year (based on 20x leveraged $5,000 call spread pricing), while the 7-day Volatility Risk Premium (VRP) recently turned negative.
Presently, according to Deribit data, there is an estimated 16% likelihood of BTC hitting $85,000 by December 2024.
Factors Driving Positive Momentum for BTC
However, Park suggested that the options market assessment may not accurately reflect the potential trajectory.
He highlighted that the negative shift in the 7-day VRP, which measures the volatility variance between the spot and options markets, signified that the actual market volatility was lower than what was being predicted by options trading.
Similarly, this discrepancy might apply to the year-end BTC price forecast derived from options markets, potentially exaggerating or underestimating BTC’s future performance.
Park also pointed out that forthcoming FTX repayments and the ongoing global trend of monetary easing could serve as favorable catalysts for BTC.
Various institutions and analysts have put forth diverse BTC price targets for the end of 2024. Bernstein, for instance, projected $90,000 by 2024 and a substantial $200,000 by 2025.
In contrast, according to Standard Chartered Bank, BTC’s value could reach $150,000 by the year’s end and soar to $250,000 by 2025.
Nonetheless, some market experts believe that geopolitical tensions in regions like the Middle East and the outcomes of U.S. elections could significantly impact BTC’s short-term trajectory.
Network Expansion and Market Demand
Based on active addresses, the growth of the BTC network has hovered around 750,000 since late September.
Despite this, the figure remains below the 1 million milestone achieved during BTC’s previous all-time high in Q1 2024, indicating comparatively lower market enthusiasm for the asset in Q4.
Observations also indicate weakened short-term demand in October, particularly from U.S. investors, aligning with the above findings.
The Coinbase Premium Index, which reflects the demand from U.S. investors, has been displaying a negative trend over the recent days.
Nevertheless, the key support level at a short-term holder cost basis of approximately $63,000 could play a pivotal role in determining whether BTC experiences a recovery in the near future.