Institutional traders are placing significant bets on Bitcoin’s rise to $79,300 by the end of November, propelled by recent high trading volumes on the Chicago Mercantile Exchange (CME) in anticipation of the US presidential election.
Joshua Lim, co-founder of Arbelos Markets, a trading firm specializing in cryptocurrency derivatives, highlighted on X the notable trading activities. “CME Bitcoin options just experienced some of its largest volume days ever, ahead of the US election,” Lim remarked.
He detailed two major transactions from the past week. On Friday, October 25th, traders bought 1,875 Bitcoin units of the November 29th $70,000 strike calls. In options trading, a call option gives buyers the right to purchase an asset at a specified strike price before the option’s expiration. Here, the strike price of $70,000 means the buyers are betting that Bitcoin will surpass this price by the end of November. Lim noted that during this trade, $8.3 million in premiums were paid, $147,000 in vega, and $65 million in delta.
On Tuesday, October 29th, another significant transaction involved the purchase of 3,050 Bitcoin units of the November 29th $85,000 strike calls. This time, $4.6 million in premiums were paid, $173,000 in vega, and $42 million in delta at the trade’s time.
These premium amounts of $8.3 million and $4.6 million indicate a strong investment commitment, reflecting high confidence in Bitcoin’s potential rise. A high vega implies that traders are expecting notable volatility, especially around the upcoming US election. Delta, representing the expected price change of the option relative to a $1 change in the underlying asset’s price, shows substantial exposure to Bitcoin’s price movements, with values of $65 million and $42 million.
The combined notional value of these positions, representing the total value of the underlying assets, is around $350 million. Lim emphasized this as a significant amount, even by Deribit standards, the world’s largest crypto options exchange.
For these trades to become profitable, the breakeven point is just below $79,300, requiring Bitcoin’s price to exceed this level by the options’ expiry date. This price target is about a 16% increase from Bitcoin’s price at the trade execution times.
“Very bullish positioning into the election, and great to see institutions sizing up like this on CME,” Lim commented. He further added that this might indicate growing liquidity in the crypto derivatives markets as the asset class matures.
The timing of these trades, just before the US presidential election, suggests expected market volatility that could impact the entire Bitcoin and crypto market. Many experts believe that a Trump victory could be bullish for Bitcoin’s price.
At the time of reporting, Bitcoin traded at $72,382.
