bitcoin It surpassed $75,000 early Tuesday, helped by changing dynamics in the derivatives market.
Prices peaked at $75,800, convincingly surpassing the long-term resistance corridor between $73,750 and $74,400, which has reversed price trends three times since 2024, according to data from CoinDesk.
The so-called bullish breakout occurred when traders closed bearish short positions initiated during the early February sell-off.
“In bitcoin, the recent move has been largely driven by significant selling of put options around the $55,000 and $60,000 strike prices, as traders increasingly recognized that these options were unlikely to expire in-the-money with just a few days left. The removal of these short coverings has contributed to the latest bullish price action,” Markus Thielen, founder of 10x Research, said in a note to clients.
A put option is a derivative contract that grants the right to sell the underlying asset, in this case BTC, at a fixed price before a certain date. Traders buy put options when they believe the price could fall or when they want protection against losses. It is basically insurance against price declines, while a call option provides upside exposure.
Traders aggressively bought put options at $60,000 and below in early February as bitcoin plunged, nearly reaching $60,000 on some exchanges. However, since then, market sentiment has stabilized, forcing traders to reevaluate their bearish positions.
The reversal of these bearish bets also has second-order bullish effects.
“Selling or closing Bitcoin puts reduces downward covering pressure and forces market makers to buy BTC to rebalance their exposure, creating supportive flows that can drive prices higher,” Thielen said.
CoinDesk warned last week that the rally could accelerate as prices approach $75,000, largely due to anticipated hedging activities by market makers.
However, there has been no significant upside buying so far. This suggests that the move so far has been driven more by hedge liquidation than aggressive bullish positioning, Thielen explained.
Rise of altcoins
Bitcoin’s rally has boosted the broader crypto market, with the CoinDesk 20 index gaining 5% to 2,202 points in the last 24 hours.
Ether (ETH) has gained almost 8% to $2,360, helped by growing demand for bullish options bets. XRP (XRP) and solana (SOL) gained 8% and 4%, respectively.
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