A recent evaluation by QCP Research has pinpointed potential factors that may have contributed to Bitcoin’s resurgence on Monday, while also exploring future possibilities.
To provide some background, Bitcoin surged beyond the $90,000 mark earlier in the day. It peaked at an intraday high of $90,330 before experiencing a significant decline to its current trading price of approximately $87,000.
The question arises: what triggered this rally during Asian trading hours and why is it significant? Insights from QCP Research offer some clarity on this event.
Bitcoin Rally Driven by Spot and Perpetual Markets
The firm’s analysis revealed that Bitcoin experienced a 2.6% increase during the Asian market session—a movement reminiscent of activity seen on Boxing Day. Specifically, BTC rose from $87,200 to $89,500 within this timeframe but later lost most of those gains as U.S. markets opened.
This particular rally drew attention due to its occurrence during a holiday period when liquidity typically dwindles. With BTC now giving back all its earlier advances, it appears poised for a conclusion similar to three days prior.
Regarding what spurred the rally, QCP noted that with only $40 million in leveraged long liquidations occurring, liquidation does not appear to be the primary factor behind this brief spike towards $90K. Instead, they attributed it mainly to spot and perpetual accumulation amidst low market liquidity conditions.
This accumulation could be partly linked to Strategy’s activities; notably, executive chairman Michael Saylor hinted at purchasing more Bitcoin yesterday before announcing today an acquisition of 1,229 BTC valued at around $108 million.
The Role of Derivative Activities
Moreover, QCP pointed out that following last Friday’s expiration of over $27 billion worth of BTC and ETH options on Deribit exchange—funding rates surged above 30%, up from negligible levels previously. This indicates that option traders who were once long gamma have shifted their positions towards short gamma in anticipation of further upward movement for Bitcoin.
This rise in call options is compelling participants into buying spot Bitcoin or other near-expiry calls which indirectly promotes further accumulation of BTC. Supporting evidence can be found in exchange data showing users actively opening long positions today along with purchases like the “BTC-2 JAN 26 94K” call option.
The Significance for Bitcoin
QCP highlighted that sustained demand for Bitcoin coupled with increased spot buying enhances prospects for a gamma-driven squeeze scenario. A breakthrough past the threshold of $94K would amplify delta values associated with call options leading dealers toward acquiring more BTC thereby propelling prices even higher.
The diminishing interest in put options contributes positively towards bullish sentiment especially since Bitcoin has shown resilience above the critical level at $86K which has tempered interest toward December’s 85K puts. Additionally considering substantial capital remaining idle post-Friday’s options expiration could prompt participants to re-enter markets soon increasing volatility levels again.
However,QCP cautioned against making decisions regarding BTC solely based on current positioning data related specificallytooptions as such actions might prove “premature.” They advised vigilance given how directionless cryptocurrency markets have been as we approach year-end transitions.