Bitcoin (BTC) Buyers Turn to Call Options as Go-To Instrument: Report

The recent impressive rise of Bitcoin beyond the $35,000 threshold, a level not seen in 17 months, has initiated a ripple effect within the market.

In direct response to this upswing, a notable $275 million in USD notional value worth of short positions was liquidated on October 23rd. According to Bitfinex Alpha Report, the magnitude of these short liquidations marks the most substantial occurrence witnessed in the market since January 2023.

This development is in line with the recurring patterns of heightened volatility and increased trading volume across the entire cryptocurrency sector.

Resurgence in Institutional Interest

On October 24th, an additional $153 million worth of short positions were liquidated as the price continued its upward trajectory. Due to the market’s inherent volatility and sudden intraday pullbacks, these two days collectively saw long liquidations amounting to $200 million. Notably, $130 million of these long positions were liquidated on October 24th, penalizing late long investors.

October has emerged as a pivotal period for Bitcoin, marked by a significant surge in institutional participation. Bitcoin options trading volume on the Chicago Mercantile Exchange (CME) is set to reach its all-time high for the month, exceeding $2 billion in monthly volume. This signals a reinvigoration of market activity and underscores Bitcoin’s growing appeal to institutional investors, Bitfinex Alpha said in its latest report.

Furthermore, the open interest in Bitcoin options is displaying signs of gradual recovery, currently standing at $1.15 billion for the month. Although it falls short of its historical peak of approximately $1.69 billion, the trajectory suggests a steady resurgence in institutional interest.

Investors Flock to Bitcoin Call Options

While overall options market activity continues to grow at a record pace, call options, for one, are increasingly
becoming the “go-to instrument” for investors aiming to capitalize on Bitcoin’s upside potential.

Bitfinex Alpa observed that October alone saw a substantial $4.3 billion surge in open interest, an 80% increase, pushing the total to an impressive $9.7 billion. These figures reveal a distinct trend: investors, both experienced and newcomers, are allocating substantial funds to options.

While the increase in call options open interest doesn’t immediately indicate a bullish outlook, it’s worth noting that most of this new open interest is tied to year-end-dated options.

This shift in risk appetite and investment strategy reflects strong confidence in long-term value appreciation. The options market now stands on equal footing with the futures market in terms of size and significance, highlighting its growing importance in the broader Bitcoin trading landscape.