Bitcoin options positioned for potential price breakout above $74,000 this month

Recent large buys of bitcoin call options with a strike price above $74,000 for June expires lead analysts to speculate that many investors are betting that prices will rise above $74,000 by the end of the month.

"Our desk saw strong bullish follow-through with significant bitcoin option call buying for June expiries, indicating positioning in the options market for a decisive break above $74,000 all-time-highs this month," QCP Capital analysts said.

Bitcoin options concentrate at $75,000 calls

According to data from the Deribit derivatives exchange, the largest cluster of bitcoin options open interest for June's end-of-month expiry are calls at a strike price of $75,000.

Additionally, on Wednesday, the highest trading volume on Deribit was seen in calls with a strike price of $80,000 for the end-of-June expiry, totaling 1723 contracts and a notional value exceeding $123 million.

Bitcoin options open interest concentrated on $75,000 calls for June end-of-month expiry. Image: Deribit

Interest rates could impact sustained institutional demand for bitcoin

Stocklytics analyst Neil Roarty attributed bitcoin's bullish uptrend, approaching its peak price of over $73,000, to increased inflows from spot bitcoin ETFs.

He pointed out that this week's surge in inflows was evidence of a notable uptick in institutional demand. He added that whether this increase in demand can be sustained will depend on the macroeconomic outlook for crypto.

"The question now is whether these institutional investors will remain bullish. That will be closely linked to interest rates. If we see cuts sooner rather than later, the strong returns bitcoin has been delivering lately could look even more appealing versus more traditional - and perhaps safer - investments. As always seems to be the case with bitcoin, the only guarantee is that we’re in for an unpredictable ride," Roarty said in an email to The Block.

One economy closely tied to the U.S. has just taken the initiative to start reducing interest rates. On Wednesday, the Bank of Canada cut its overnight rate by 25 basis points to 4.75%. The central bank in Ottawa said it was "reasonable" to expect further cuts as they have confidence in taming inflation. 

Bitcoin is changing hands at around $70,750 at the time of writing, having increased over 1.3% in the past 24 hours, according to The Block’s price page.