Bitcoin price rose to $66,930.4 on Wednesday evening, but fell over 3% shortly after booking some gains.
The launch of the first ever bitcoin futures-backed exchange-traded fund in the US has revitalized the cryptocurrency universe and helped the largest cryptocurrency break out of the $52,000-$58,000 range to reclaim its record high. is of.
However, with the record high sector comes questions as to whether one should book profits or make incremental investments or just sit tight.
A look at the bitcoin options market can provide a clue as to how to go about your position in the cryptocurrency. Ever since news broke that the US Securities Exchange Commission would approve bitcoin ETFs, the options market for bitcoin has exploded.
More clearly, most of the positions being added by traders are over the $100,000 mark for call options expiring on December 31. This indicates, traders expect the approval of bitcoin ETFs to fuel a fresh rally in the market led by buying from institutional investors.
“Open interest in call options dwarfs that in put options, in line with overall bullish market sentiment,” Glassnode said in its latest newsletter.
However, Glassnode noted that for the first time this year the supply of bitcoin from long-term HODLers is increasing, proving that they are considering realizing some of their paper profits. This coupled with the fact that the volume of bitcoin futures is declining along with the increase in open interest, requires some caution in the short term.
“While the market at large remains relatively healthy, and demand is meeting the sell-off of LTH (long-term hodlers), the prospect of increased leverage in both the futures and options markets is prudent, taking some caution,” Glassnode said.