Some Bitcoin Options Traders Still See $100k BTC by End of Year
Over the last 30 days, Bitcoin’s price action has been consolidating between $30k and $40k levels. Moreover, looking at data provided by Coinmarketcap, it seems as if Bitcoin is trapped within a contradicting range, narrowing down to around $34,000. In the last 24 hours, Bitcoin recorded an intraday high of around $34,600 and an intraday low of around $33,670.
It is clear that Bitcoin’s volatility in the near-term has cooled off, at least for the time being. This can be further established considering that the majority of options traders are presently putting on “short strangles” — essentially a bet that Bitcoin will continue to see-saw in the range it is currently trapped in.
Nevertheless, a number of Bitcoin options traders are aiming at bullish targets for the year-end, with some even spotting $100,000 as their objective.
What Impacts the Price of Bitcoin?
Bitcoin’s limited total supply along with an increasing number of hodlers refusing to sell its available circulating supply have acted as powerful price drivers. For investors, this alone can be a pretty convincing reason to assume Bitcoin would keep appreciating over time. However, in reality, the situation is far more complicated.
Bitcoin price action depends on numerous factors. Just a few of the obvious criteria include:
- How many dollars, euros, and yuans are in circulation;
- How are other markets (real estate, equities, commodities) are progressing;
- Popular methods of hedging against inflation;
- Inflation rates;
- Interest rates
However, what directly affects the price of Bitcoin is the market participants at any given moment. Think of the 10.7 million Bitcoin that hasn’t moved in the last 12 months. If they’re suddenly sold in a very short amount of time, the price of Bitcoin will drastically decrease—as available supply increases.
Ultimately, this shows how Bitcoin’s price action is impacted by a number of factors outside of Bitcoin investing strategies. External economic factors have a significance importance.
Can Bitcoin Hit $100K By the End of This Year?
According to data from CryptoQuant, currently, there is merely 2.5 million Bitcoin available on crypto exchanges. As the contrast between Bitcoin value and price grows more noticeable, the possibility of Bitcoin hitting $100,000 by the year-end increases.
Nevertheless, to get an idea of how investors predict Bitcoin will end the year, it is suitable to investigate the Bitcoin calls (buy) in the options market. Generally speaking, Bitcoin call options substantially outnumber the protective puts, yet this is mostly normal for almost all assets with long expiries.
As of now, a Bitcoin call option for $50,000 on Dec. 31 is valued at $4,350, as per data by Deribit. Further, the same instrument using a $100,000 strike price costs $1,185.
The Black & Scholes model, a pricing model used to determine the fair price for a call or a put option, predicts that the current $1,185 price for the $100,000 call option has a 13% probability. Despite a slightly low probability, Bitcoin options trades show that many traders are still predicting Bitcoin will end the year at $100,000.
Not everyone has such a view, however.
Some Analysts Predict Bitcoin Will Extend Losses
A number of prominent analyzers anticipate Bitcoin to first plunge to lower levels before starting its next rally. For instance, Scott Minerd, investments chairman at Guggenheim, predicts Bitcoin to drop to $10,000 price levels.
Minerd, who appeared in an interview with CNBC, stated:
“When we look at the history of crypto and we look at where we are, I mean, I really do believe this is probably a crash, and you know a crash would mean we’d be down 70-80% which, let’s just say that’s between 10 and 15 thousand.”
Minerd is not the only investor to expect Bitcoin to extend losses. On a note, the leading global investment bank JPMorgan asserted that Bitcoin might drop to $23,000 price levels as the majority of institutions are not buying the current BTC dip.
The note from JPMorgan said:
“More than a month after the May 19 crypto crash, bitcoin funds continue to bleed, even as inflows into physical gold ETFs stopped. This suggests that institutional investors, who tend to invest via regulated vehicles such as publicly listed bitcoin funds or CME bitcoin futures, still exhibit little appetite to buy the bitcoin dip.”
Other established figures in the world of traditional investing, such as the best-selling author of “Rich Dad Poor Dad”, also have a bearish sentiment towards the markets. The author has called the current market prices the “biggest bubble in world history”. In a recent tweet, he said he is waiting for Bitcoin to drop to $24,000.
What is your Bitcoin price prediction for the year-end? Do you think Bitcoin will manage to hit $100,000 by the end of 2021? Let us know in the comments below.