BTC and ETH Options Show Cautious Market Positioning

The cryptocurrency market experienced a rebound this week, with Bitcoin surpassing $122,000 and Ether rising by 21% to over $4,300, reflecting stronger risk sentiment in U.S. equities. According to QCP Capital, the correlation between BTC and equities has strengthened since mid-July. The total market capitalization of cryptocurrencies increased to over $4.1 trillion, marking a 2% rise on Monday. With the July CPI data set to be released on Tuesday, analysts expect a slight increase in headline inflation to 2.8% year-over-year. A lower-than-expected inflation could enhance expectations for a September rate cut from the Federal Reserve, while a hotter CPI print might destabilize risk assets and revive concerns regarding macroeconomic conditions. Onchain positioning suggests traders are preparing for these outcomes, with QCP noting demand for BTC put options at $115,000-$118,000 to hedge against potential market declines. As of last week, the aggregated open interest in BTC options was approximately $43 billion, close to July's peak of $49 billion. ETH options also saw elevated interest, reaching $13.9 billion, nearing the all-time high of $14.6 billion set in March 2024. Looking at market flows, institutional demand and U.S. spot ETF activities are crucial as Bitcoin approaches previous highs, with crypto investment products attracting $571 million in net inflows. Wincent Senior Director Paul Howard maintains a Bitcoin target of $150,000 by the end of the year, supported by historical data indicating potential for post-halving rallies. While some analysts anticipate short-term corrections, others predict BTC may reach $200,000 by late 2025. The Block remains committed to providing factual and independent analysis on the crypto industry, serving as a resource for emerging trends and market movements.