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With risk appetite recovering in global financial markets, Bitcoin ($BTC) has surpassed the $75,000 level for the first time in a long time. Major altcoins, including Ethereum (ETH), are also showing signs of recovery. Ethereum rose 6.2% in the last 24 hours to $2,330, while XRP increased by 9% to $1.56.
While this increase is attributed to strengthened risk appetite stemming from a combination of factors in the market, such as the recovery in the Nasdaq index and the fall in oil prices, 10x Research CEO Markus Thielen shared his latest analysis.
According to the analyst, the rise in $BTC is due to increased put option sales and liquidations in the options market.
According to Markus Thielen’s analysis, Bitcoin’s recent upward trend was triggered by options traders closing their put positions.
According to CoinDesk, Thielen believes the rally was influenced by a structural shift in put options trading between $55,000 and $60,000.
“The recent rise is largely due to the closing of put options with strike prices of $55,000 and $60,000, as their probability of being realized at expiry has decreased.”
Put options are a hedge against price declines, and investors typically buy them when they expect a market downturn. In this context, a decrease in put options also signals a decrease in expectations of a market decline.
In this context, Thielen noted that during the sharp decline in February, investors heavily purchased put options to hedge against downside risk. However, as the market stabilized, the probability of these options being in the money at expiration decreased, leading investors to close their put positions.
Thielen argues that this process creates upward momentum, as closing put options reduces selling pressure from market makers managing their risks, forcing them to buy $BTC to rebalance their positions, which could ultimately push the $BTC price higher.
*This is not investment advice.