CF Benchmarks: Activity in the BTC options market indicates that the asset may rise to new highs

What’s new? On January 21, bitcoin options trading on the Chicago Mercantile Exchange (CME) saw the strongest bullish sentiment since Donald Trump won the election on November 5. Combined with the growing inflows into BTC-based spot exchange-traded funds (ETFs), this allows analysts to predict that the first cryptocurrency will soon reach new price highs.

Material by CoinDesk

What else is known? Demand for call options has surged among traders, pushing the skew to 4,4% — the highest since early November — according to digital asset index provider CF Benchmarks.

Options skew is the difference in implied volatility between call and put options. A positive index indicates that the market expects an upward price movement.

A call option gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specified period. If the buyer exercises the call, the seller must sell the asset. Conversely, a put option allows the buyer to sell the asset at a specified price on or before the expiration date.

On January 21, the bitcoin price rose 5%, briefly surpassing the $106 000 mark after buyers defended the $100 000 support level, even though Trump did not mention the cryptocurrency or the strategic BTC reserve in his inauguration speech on January 20.

The rise in the value of the asset itself was also accompanied by renewed interest in spot bitcoin ETFs listed on US stock exchanges. Over the day, cumulative net inflows across 12 funds totaled $802 million, according to SoSoValue data.

Of these, most of the inflow ($661,8 million) came from the IBIT fund from the world’s largest investment company BlackRock, which also contributed to the strengthening of bullish sentiment.

In general, the inflow to BTC ETF has been maintained for four consecutive days, during which time it exceeded $3 billion. According to BRN analyst Valentin Fournier, sustained institutional support will drive the asset to new highs.

In addition, long-term bitcoin holders — wallets holding the asset for more than 155 days — are reducing their profit-taking activity, according to data from blockchain analytics platform Glassnode.