So far this month, oil has soared 40%, while gold, a traditional safe haven asset, has fallen 5%. Meanwhile, Bitcoin surpassed a crucial psychological barrier of $75,000 this Tuesday, accumulating gains of almost 14% since the start of the war at the end of February. The cryptocurrency moves in the $74,175 past noon in Europe.
The situation contrasts with the spectacular crash in October, when the price of the original cryptocurrency halved from its peak of more than $126,000. However, a tentative recovery that began in late February amid geopolitical uncertainty has accelerated this month, as cryptocurrency investors have returned to investing in exchange-traded funds (ETFs).
“Bitcoin’s resistance in this case has less to do with the narrative and more to do with the mechanics,” says Rachael Lucas, analyst at BTC Markets, in statements to Bloomberg. “Institutional buyers, particularly corporate treasuries, are absorbing supply with every dip.” According to data compiled by Bloomberg, spot Bitcoin exchange-traded funds (ETFs) traded in the US have received capital inflows of approximately $1.5 billion this month.
According to Markus Thielen, head of research at 10x Research, the latest bullish signals in the cryptocurrency markets appear to be driven, in part, by the unwinding of traders’ positions in optionswho anticipated that Bitcoin would continue to fall below the level between $55,000 and $60,000. As traders closed their negative positions, Bitcoin has rallied.
“Selling or closing Bitcoin put options reduces downward hedging pressure and forces market makers to buy Bitcoin to rebalance their exposure, generating support flows that can drive prices higher,” Thielen writes in a note collected by the US agency.
According to data from derivatives trading platform Deribit, there are approximately $1.5 billion in Bitcoin put options clustered around $60,000, while there are $1.3 billion in call options at $75,000.
However, the underlying momentum is not yet “accompanied by significant upside call option buying, suggesting that the move so far has been driven more by uncovering than aggressive bullish positioning,” Thielen adds.