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Options traders are betting aggressively that Bitcoin will be worth more than $80,000 on April 30, but Skew claims there is a 94 percent risk their positions will be useless.
With Coinbase’s widely awaited direct listing IPO scheduled for next month, options traders seem to be betting that Bitcoin will soar to fresh all-time highs in the coming weeks.
On March 24, the founders of crypto analytics company Glassnode tweeted data indicating that options traders on Deribit, a peer-to-peer crypto derivatives platform, are stockpiling contracts with a strike price of $80,000 due to expire on April 30.
Contracts with a notional value of 4,000 BTC have been bought targeting the price-point in particular, which is at least 50% more than any other strike-price.
— Jan & Yann (@Negentropic_) March 24, 2021
If the price is less than $80,000 at the end of April, the contracts will be worthless, showing that futures traders believe the Bitcoin markets are quite a long way from peaking.
However, according to Skew, a crypto futures data aggregator, based on trading data for the April 30 settlement, there is only a 6.19 percent probability that BTC rates will be over $80,000 as the positions mature.
Significant volume has already converged around contracts with a strike price of $120,000, implying that some traders expect Bitcoin would more than double in the next five weeks. Skew believes Bitcoin is just 2.15 percent expected to hit $100,000 by the April 30 expiry date.
However, since many options traders are accumulating bets through several contracts with divergent strike rates, some of the traders betting on $80,000 or $120,000 do not expect prices to increase that high.
According to Skew numbers, April 30 contracts are currently the third-most common among options traders, with open interest equalling a notional value of 38,700 BTC.
Contracts expiring on June 21 have 42,300 BTC worth of notional open interest, while contracts expiring on March 26 have 117,900 BTC worth of notional open interest, or $6 billion in notional value.
Despite the entry of Chicago Mercantile Exchange into the Bitcoin options market in January 2020, Deribit continues to dominate options trading rate.
Skew reports that 91 percent of BTC options contracts exchanged in the last 24 hours changed hands on Deribit, with Bit.com accounting for 5 percent, OKEx accounting for 2 percent, and CME and LedgerX accounting for approximately 1 percent each.