Bitcoin: Institutional investors anticipate a rebound to $72,000 by the end of the month

Bitcoin seems frozen for several sessions. However, far from spot charts, institutional investors are increasing their bets on the derivatives market. An unusual concentration of very short-term positions indicates that traders are preparing for a potentially market-shaking event. Behind this agitation are already emerging the price levels that professionals are monitoring before the next American monetary deadlines.

Massive flows of options blocks recorded on Deribit

The crypto derivatives market has just been the scene of institutional activity on a scale rarely matched in recent months, targeting a moderate rise in price by the end of July. Thus, the precise structure of these important transactions is presented through particularly rigorous numerical data:

• The overall order volume: the simultaneous purchase of 20,000 call options contracts with a strike price set at $70,000 expiring on July 31;
• The associated hedging position: the sale of an identical number of 20,000 contracts at the strike price of $72,000 for the same expiration date;
• An accumulation of block flows: a cross transaction representing a total volume of 40,000 open contracts.

Asked about the nature of these major flows, Jean-David Péquignot, commercial director of the Deribit options exchange, said declared : “this week we observed large blocks on BTC bullish call spreads”.

The technical structure of the bull call spread in the face of volatility

The financial configuration chosen by these economic operators corresponds precisely to a bull call spreadan options strategy designed to maximize returns in a moderate upside scenario while drastically limiting upfront costs. By purchasing the option at the lower strike of $70,000 and simultaneously selling the option at the higher strike of $72,000, bitcoin traders finance part of their buying premium through the premium received on the resale.

This technical choice, however, implies an explicit renunciation of gains beyond the $72,000 level, the maximum profit being strictly capped at this threshold. Such financial behavior, characterized by purchases of options located approximately 10% out of the money, reflects an approach described as buying on a pullback, prudent and measured, far from the speculative euphoria which would anticipate a new immediate historical record.

Internal risk management by investors revolves around the cost of entry and the mitigation of temporal depreciation of contracts. This structure allows professional investors to minimize the impact of implied volatility if the crypto price were to stagnate or undergo a lower correction before the end of July.

Additionally, unlike a simple call option purchase, exposure to unanticipated fluctuations in the spot market is cushioned by the short position at $72,000 for bitcoin, providing relative protection while maximizing the marginal efficiency of capital deployed. The predominance of this combination indicates that capital is targeting a very tight pivot zone to materialize its short-term profits.

The Fed’s macroeconomic deadline

The timing of this contractual configuration owes nothing to chance since it aligns directly with the American macroeconomic calendar, the July 31 deadline occurring only forty-eight hours after the Federal Reserve’s monetary policy meeting scheduled for July 29. Investors are adjusting their crypto portfolios based on the recent slowdown in inflation in the United States, marked by the latest releases of the Consumer Price Index (CPI) and Producer Price Index (PPI), which have significantly eased fears of monetary tightening.

Data from the Fed funds futures market currently indicates an overwhelming 75% to 80% probability that the central bank will maintain current interest rates during this July session. It is therefore the potential adoption of flexible rates by monetary officials which acts as the expected catalyst to propel the price towards the defined objective.

If the Federal Reserve’s prospects of a status quo support the thesis of a technical rebound in the price of bitcoin towards the $72,000 threshold, the actual price movement will depend on the ability of market makers to absorb the covering pressure as the strike price approaches $70,000. A nuanced analysis, however, requires us to remember that a firmer speech than expected from the central bank or a surprise resurgence of inflationary pressures would instantly invalidate this bullish scenario.