The price of Bitcoin seems on the brink of blasting past its all-time high (ATH) at the high area of its current levels. The cryptocurrency has been on a bull run due to the launch of spot Bitcoin Exchange Traded Funds (ETF), which officially onboarded institutions to the nascent sector.

As of this writing, Bitcoin (BTC) trades at around $62,900 with a 3% profit in the last 24 hours. In the previous week, the cryptocurrency recorded a critical 22% profit. It stood as one of the three top gainers in the top 10 by market cap, only surpassed by Solana (25%) and Dogecoin (57%) in the same period.

Bitcoin-Based Derivatives Hint At Further Gains

Data from the derivatives platform Deribit indicates a spike in long positions by Options operators. Since early February, these traders have accumulated important call (buy) contracts with a strike price above $65,000.

At first, as the report indicates, the increase in bullish positions was thought to be part of a Bitcoin “Halving” strategy. However, the BTC ETF Flows seem to be the key component behind the rally.

As cryptocurrency entered the $60,000 area, several operators rushed to accumulate call contracts, leading to a Fear Of Missing Out (FOMO) rally to its current levels. The chart below shows that the FOMO buying began when BTC breached the $57,000 level.

The spike in trading activity during yesterday’s session led to a significant jump in Implied Volatility (IV). Overleveraged positions further propelled the metric, Deribit stated:

The 62k to 64k surge was so quick, and with high leverage across the whole system, that when sales hit the market a cascade sent BTC down to 59k in 15mins, and some Alts (also massively leveraged) dropped 50% on some exchanges before promptly bouncing as BTC jumped to 61.5k.

As the market continues to experience sudden moves due to the high IV, there is little change in the market structure in the derivatives sector. In other words, Deribit still records a lot of bullish positions for the coming months, which suggests optimistic conviction by these players.

BTC Price On The Short Timeframe

Despite the bull run, the Bitcoin price could dip as euphoria takes over the market. According to economist Alex Krüeger, the spike in trading volume across the derivatives sector indicates the formation of a “local top.”

The analyst believes that retail has returned to the market driven by FOMO, which often hints at short-term predicaments for long traders. Krüger predicted further gains into the $70,000 area via his official X account and then a drop into the $55,000 area.

The analyst stated:

ATH are inches away. That’s price discovery territory. Thus very easy for things to get even crazier. This is just not where one opens new longs. Too easy to get a quick flush out of nowhere. Ideally we see funding cool down and price consolidate below ATH then break out.

Cover image from Dall-E, Chart from Tradingview

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Filed under: Bitcoin - @ February 29, 2024 11:00 pm