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The market data for Bitcoin options show that the probability that the price of Bitcoin will reach USD 20,000 in 2020 is 9%

May 20, 2020

The Bitcoin (BTC) options market, largely dominated by deribit and CME, offers BTC a 9% chance of hitting its all-time high of $ 20,000 in late 2020.

Given Bitcoin’s tendency to see an extended rally six to eight months after halving, option market traders are relatively cautious about BTC’s medium-term trend.

Data shows that the BTC options market is tending towards bulls

In the short term, many traders from both Deribit and CME appear to be optimistic about BTC price developments.

The market data for Bitcoin options show that the probability that the price of Bitcoin will reach USD 20,000 in 2020 is 9%
The market data for Bitcoin options show that the probability that the price of Bitcoin will reach USD 20,000 in 2020 is 9%

According to ecoinometrics, the CME Bitcoin Options Exchange recorded 22 sales per 1 purchase. In simple terms, one person was sold for every 22 people who bought BTC.

Sales against Bitcoin purchases on the CME options exchange. Source: Ecoinometry

The basis for the option traders’ optimism about short-term Bitcoin price movements is likely to be successive tests of the USD 10,000 resistance level.

If a crucial level is tested three or four times, either support or resistance, there is a high probability that it will break. Bitcoin has tested a total of $ 10,000 five times in the last 11 days, weakening the resistance.

Most professional option traders expect Bitcoin’s price to be over $ 10,000 in the short term, which is also supported by an improved sentiment regarding high-risk assets such as individual stocks. .

Why aren’t traders bullish in the long run?

The Bitcoin price tends to move in extreme cycles. It has long been speculated that aggressively buying and selling whales at highs and lows at BTC leads to huge price fluctuations.

Options traders may feel uncomfortable placing medium or long-term bets on the price of Bitcoin, as these are unpredictable under the current conditions.

In previous halving, Bitcoin’s price took around six to eight months to start a longer rally. The halving of May 2020 therefore does not guarantee that the price of BTC will reach a historic maximum at the end of the year.

Still, there are still some positive data points that support Bitcoin’s record price forecasts for the fourth quarter of 2020.

For example, Bitcoin will see the seventh golden cross in history if the price of BTC stays above $ 9,500 in the coming days.

Bitcoin is also far from displaying oversold terms in higher periods. The weekly chart shows that various momentum oscillators indicate that the current rally can exceed the $ 10,000 to $ 11,000 range.

Both the Golden Cross and the weekly MACD are relatively short-term indicators that can trigger optimism in the options market.

Currently, the coincidence of several factors, including the volatility of Bitcoin caused by the coronavirus pandemic in very unsafe environments like the current one, seems to make option traders more cautious in long-term trading.