BlackRock Bitcoin ETF Options Surge: December 20 Call Signals BTC Price Target Of $180,000

by

As a seasoned crypto investor with years of market observations under my belt, I find the recent developments surrounding BlackRock’s Bitcoin ETF intriguing. Having weathered numerous market cycles and witnessed the rise and fall of countless digital assets, I can confidently say that this move by BlackRock is a game-changer for the crypto space.

In simple terms, the world’s biggest asset manager, BlackRock, has commenced options trading for its Bitcoin Exchange-Traded Fund (ETF), known as the iShares Bitcoin Trust (IBIT). This is happening after the ETF received regulatory green light in January and has since witnessed substantial investments.

Increased Liquidity And Reduced Volatility On The Horizon

Based on Bloomberg’s report, it’s expected that allowing options trading on the 43-billion-dollar iShares Bitcoin Trust could help stabilize Bitcoin’s price fluctuations and attract a more diverse range of investors to the cryptocurrency market.

As a researcher, I, Alex Thorn, Head of Firmwide Research at Galaxy Digital, expressed during a recent interview on Bloomberg Television that the more Bitcoin is widely owned, the less volatile it’s expected to be. I elaborated by stating that options can help mitigate this volatility, and as the volatility decreases, investors will have the opportunity to take on larger position sizes without the same level of risk.

Thorn pointed out that if the instability of Bitcoin lessens, investors might start viewing it more as a practical investment option for real-world applications instead of just considering it as a risky bet.

Having multiple choices available gives institutions the ability to manage their risks better, which can boost liquidity and possibly influence retail trading when the market is on an upward trend.

Call Options Dominate BlackRock’s Bitcoin ETF On Day 1

According to Bloomberg ETF analysts Eric Balchunas and James Seyffart, the initial value of options trading for IBIT amounted to approximately $1.9 billion, with this amount being distributed among 354,000 individual contracts on its first day.

289,000 of these contracts were call options, while 65,000 were put options, creating a ratio of approximately 4.4 calls for every put (or a bullish 4.4:1 ratio). According to Seyffart’s assertion, this strong preference towards buying call options likely played a significant role in Bitcoin reaching unprecedented highs of $94,000 during the crypto market’s Tuesday trading session.

Instead of Balchunas noting that most options contracts are bullish, particularly the December 20 call option which suggests Bitcoin’s price could double within a month, thereby implying investors anticipate BTC reaching a new peak of approximately $180,000 by then, we can say:

The balance between buying and selling volumes for BlackRock’s Bitcoin ETF was “noteworthy,” as Balchunas observed, because a ratio of 0.17 suggests robust optimism among investors compared to other ETFs like the SPDR S&P 500 ETF (SPY), which has a ratio of 1.1.

In Marty Party’s recent social media update, he emphasized that options tied to the iShares Bitcoin Trust will result in actual Bitcoin upon exercise. This implies that when an option is exercised, Bitcoin itself will be delivered instead of cash or shares. Essentially, this provides investors with a direct connection to Bitcoin price fluctuations without requiring them to engage with crypto exchanges directly.

Currently, I’m seeing that the premier digital asset is being traded at around $91,580, marking a 4% increase over the past week following today’s optimistic surge to a fresh all-time high.

Read More

2024-11-20 16:34