Bitcoin price, which gained more than 20% in value in the last week, approached the record level of 69 thousand dollars. This rise is fueled by investors’ increasing interest in options. Experts expect Bitcoin to follow a very volatile course in the coming period. So, is Bitcoin awaiting a parabolic rise or a severe decline?
Traders flock to options
Bitcoin price gained more than 20% in the last week and approached the record level of 69 thousand dollars. Behind this rise lies the increasing demand for options. Investors show their belief that the price of Bitcoin will rise further through options. However, this situation has brought Bitcoin to a critical threshold. The price can either go into a parabolic rise or go into a severe decline.
According to Bloomberg, one of the key factors behind Bitcoin’s recent rise is demand for options. Options give investors the right to buy or sell Bitcoin at a certain price on a certain date. Recently, investors have started to show great interest in short-term options. This situation also increased Bitcoin’s volatility. Volatility indicates the level of fluctuation in the price of an asset.
This concentration in short-term options can lead to a condition known as “Gamma Squeeze.” Gamma Squeeze is a situation where a small change in price can trigger a large swing in the market. According to data from Deribit, the strike prices of option contracts dated March 29 are clustered at the levels of 65 thousand, 60 thousand and 70 thousand dollars. This indicates that there is a risk of Gamma Squeeze at these levels.
Is there a rise next for Bitcoin price? Fall?
CoinShares research expert Luke Nolan says that it is difficult to predict what course the price of Bitcoin will follow in the coming period. Nolan states the following:
Everything indicates that if momentum continues to build, we could see another violent move upwards. But even a small change in investments in ETFs can cause people to quickly deleverage.
Nolan also notes that if a large amount of call options are purchased, option sellers will be forced to purchase Bitcoin to hedge their exposure, which could push the price even higher. As a result, Bitcoin’s price has reached a critical threshold. The developments in the options market will determine the course of the price in the coming period.
Expert opinions
Experts expect the price of Bitcoin to follow a very volatile course in the coming period. While some experts argue that the price may exceed 70 thousand dollars and reach a new record level, some experts predict that the price may fall below 50 thousand dollars. It is very important for investors to consider these risks and do detailed research before investing in Bitcoin.
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