Bitcoin options market signals renewed optimism ahead of Trump inauguration: analysts
2025-01-06
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The bitcoin market is displaying renewed bullish momentum with heightened activity in options targeting $110,000 and $120,000 strike prices on the Deribit derivatives exchange. Bitcoin has rebounded to approximately $99,000 after a late-December pullback saw its price dip to around $91,000, according to The Block's Prices Page.
Derivatives traders are particularly focused on $120,000 strike price call options — now the most popular on Deribit — with a notional open interest of $1.52 billion. The put-call ratio for all expiries on Deribit has now fallen to 0.24. This ratio, which compares the volume of put options to call options, underscores a bullish market sentiment as traders position for potential price increases. A ratio below 1.0 indicates a preference for calls over puts, signaling expectations of upward momentum.
Adding to the positive outlook, an Amberdata crypto derivatives report released Monday suggests the upcoming inauguration of Donald Trump as U.S. president on Jan. 20 could act as a catalyst. "The Trump inauguration and the days following are prime opportunities for bullish announcements or policies that could further propel bitcoin higher," the report noted.
The open interest structure of bitcoin options for all expiries reveals a clear bullish bias. Image: Deribit.
On Saturday, a trader on Deribit spent over $6 million purchasing $100,000 strike call options expiring on March 28, according to data from Amberdata. This bet suggests confidence in bitcoin returning to six-figure territory in the coming months.
"This trade anticipates that new highs for bitcoin will be broken just a few months after Trump officially takes office," Amberdata said on X.
A $6 million premium was paid for bitcoin calls at a strike price of $100,000 for the end-of-March expiry. Image: Amberdata.
A call option gives its buyer the right to purchase the underlying asset at a specific price within a set period. Buying calls reflects a bullish outlook, as traders aim to profit from upward price movements with limited downside risk.
The futures market is also showing promising signs of health, with bitcoin and ether funding rates for long positions hovering around an annualized 10%, according to Coinglass data. "These levels suggest a stable environment with potential for continued market growth," Bitget Research Chief Analyst Ryan Lee told The Block.
Institutional inflows fuel optimism
Institutional investors are contributing to the recent optimistic sentiment. U.S. bitcoin exchange-traded funds (ETFs) reported substantial inflows at the end of last week, totaling $900 million on Friday.
Fidelity’s bitcoin ETF (FBTC) led the pack, capturing $357 million, while BlackRock’s iShares Bitcoin Trust (IBIT) and Ark Invest’s ARKB saw $252 million and $222 million in inflows, respectively, according to data from Farside Investors.
"The holiday inactivity period is over, and institutional interest is building again," BRN lead analyst Valentin Fournier told The Block. "This could pave the way for a strong rally, especially as market participants anticipate President Donald Trump’s upcoming inauguration on January 20."
Crypto market liquidity and broader equities trend
One analyst noted that recent market developments have improved liquidity conditions. "The cryptocurrency market is seeing a range of dynamics that are shaping the outlook for bitcoin and ether, such as the total market capitalization of stablecoins, which rebounded last week with a $3 billion increase," Bitget's Ryan Lee said. He added that this growth, primarily driven by institutional activity, reflects a resurgence of traditional institutions engaging with the crypto market, improving overall liquidity.
Lee forecasted that bitcoin is anticipated to trade within the range of $92,000 to $110,000 in the run up to Trump's presidential inauguration on Jan. 20, while ether is expected to fluctuate between $3,400 and $3,900. "These projections account for the interplay of liquidity trends, token issuance activity, and futures market conditions," he said.
However, Valentine Fournier predicts bitcoin will post a pullback after the inuguration, a similar view held by Former BitMEX CEO Arthur Hayes. Hayes, who now manages a family office named Maelstrom, wrote that there are no politically acceptable solutions for Trump to quickly make policy changes widely expected by crypto investors. "The market will instantly wake up to the reality that Trump has at best one year to enact any policy changes on or around Jan. 20," Hayes said. "This realization will lead to a vicious sell-off in crypto and other Trump 2.0 equity trades."
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