Bitcoin Options Traders Anticipate Imminent Breakout Above $74K to New Record Prices

• Options trading desks saw heavy buying activity for BTC calls with June expiry.
• BTC "ready to squeeze higher" with some $1.5 billion worth of shorts concentrated around the $72,000 area that can be liquidated, Matrixport noted.

Bitcoin BTC$101,859.27 options traders are increasingly positioning for the asset to hit fresh record prices this month, market data suggests.

"Our desk saw strong bullish follow-through with significant call buying for June expiries, indicating positioning in the options market for a decisive break of 74,000 all-time-highs this month," digital asset hedge fund QCP said in a Wednesday market update.

Options are derivative contracts that give buyers the right to buy or sell an asset at a certain price before or at a predetermined date when the contract expires. If the underlying asset doesn't reach the strike price (out of the money), the option will expire worthless. Purchasing calls implies a bullish outlook for an asset's price, while put option buyers are bearish.

"Options flow was clearly bullish today with big sizes on long BTC OTM [out of the money] call spreads in end June, and to a lower extent end July," institutional crypto derivatives trading network Paradigm said in a Telegram broadcast.

Joshua Lim, co-founder of crypto derivatives principal trading firm Arbelos Markets, noted "very concentrated call buying" on Tuesday with about 1100 contracts purchased of June 28 expiration call spreads in $74,000-$80,000 strikes, representing around $80 million notional demand.

A call spread is an options trading strategy in which buys of call options at a lower strike price and are made alongside sales of the same amount of calls at a higher strike price with the same expiry, aiming to profit from a limited price increase.

Bitcoin has spent almost three months consolidating since notching an all-time high slightly below $74,000 in mid-March. After plummeting briefly below $57,000 in early May, it saw a steady recovery, now changing hands at around $71,000, only a few percentage points from new record prices.

Crypto investment services firm Matrixport said in a Wednesday X post that bitcoin "appears to be ready to squeeze higher," supported by heavy inflows to U.S. spot bitcoin exchange-traded funds and rising open interest in the futures market.

A surge above the $72,000 level could induce a short squeeze, Matrixport noted, as there's some $1.5 billion worth of leveraged futures contracts betting on lower prices concentrated around that range that could be liquidated, exacerbating the move higher.