QCP Capital says risk-on sentiment could boost bitcoin prices amid high demand for upside calls

Singapore-based trading and market-making firm QCP Capital estimates risk assets, including bitcoin, could be boosted as sentiment strengthens amid signs of an improving climate for investors.

"Risk-on sentiment could extend to crypto and gold, pushing bitcoin higher given the strong demand for topside calls," QCP Capital analysts said in their latest market update. The strong demand for the upper side of the price range for bitcoin call options suggests derivatives traders expect the price to appreciate.

Analysts at London-based trading firm Wintermute said in their own market update that this risk-on sentiment stems from a confluence of factors. "An election year is upon us, and the economy shows promising signs of a soft landing. These elements converge to create a potentially favorable climate for investors, as evidenced by the S&P 500's recent upward trajectory, laying the groundwork for renewed confidence across various asset classes, including bitcoin," they said.

Traders show caution ahead of U.S. elections

However, Tuesday's report from QCP Capital noted that derivatives traders are showing increased interest in bitcoin put options for expiry dates closer to the time of the U.S. presidential election in November. This suggests that they may be hedging for increased market volatility or a potential decline in bitcoin prices around that time.

Additionally, QCP Capital's analysts observed a significant difference in the expected volatility of options that expire before the election versus those that expire after the election, with a 6-point gap between them. "The put-call options skew is in favor of puts in the run-up to the U.S. election, with a steep 6-point volatility spread between pre-election and post-election expiries," they said.

Over the past 24 hours, the bitcoin price increased by over 4%, trading at around $60,758 as of the time of writing. The digital asset's upward trajectory over the past day saw an increase in short liquidations. There were over $62 million in bitcoin short liquidations across centralized exchanges in the past 24 hours, out of a total of $85 million in liquidated bitcoin positions, according to data from Coinglass.