Bitcoin options traders focus on calls above $80K as election, Fed meeting near

Bitcoin options traders are increasingly focusing on calls for strike prices above $80,000 for options expiring in November, according to an analyst. This comes as the market anticipates two key events next month: the U.S. presidential election on Nov. 5 and the Federal Open Market Committee’s (FOMC) interest rate decision on Nov. 8.

"The current highest amount of bitcoin options open interest is for options expiring on the November 8 expiry, on the day of FOMC meeting and days after the U.S. election, with a clear bias towards call options. This is supporting the hypothesis that bitcoin options traders are generally positioning for a bullish outcome," Bitwise head of research for Europe André Dragosch told The Block.

Call options are seen as bullish because they allow traders to buy bitcoin at a specific price before a set expiration date. If traders believe bitcoin's price will rise, purchasing call options lets them secure a lower price now, enabling them to profit if the price increases later.

The U.S. Federal Reserve is widely expected to announce a 25 basis point cut to the federal funds rate during its November 8 meeting. According to the CME FedWatch tool , the probability of such a rate cut now stands at 90.2%. A rate cut could increase risk appetite in broader markets, and traders appear to be positioning accordingly in cryptocurrencies.

"Option traders seem to be anticipating an uptick in bitcoin’s volatility around the time of the FOMC decision, as evidenced by the term structure of implied volatility for options expiring around that date,” said Dragosch.

Derivatives traders focus on November's end-of-month expiry

There is a significant concentration of call option contracts expiring on Nov. 29, according to Deribit data. More than 3,100 call options with strike prices between $80,000 and $82,000 have been opened for November's end-of-month expiry on Deribit, representing a notional value of over $212 million. In comparison, fewer put options (1,200 contracts) are in play, with a notional value of $82 million, reinforcing the market’s bullish stance in November.

Despite the positive sentiment for bitcoin's price trajectory towards the end of November, some traders are taking hedging positions, with an increase in put open interest seen recently.

"There was some hedging activity based on a recent increase in put open interest, associated with an increase in the relative put/call open interest ratio. Based on this it looks like there is an increase in hedging activity lately, despite an overall positive market environment," Dragosch said.

Deceleration in bitcoin ETF inflows 

Bitcoin's price spiked to around $69,400 early on Monday before pulling back to trade at around $68,200, as of the time of writing. The digital asset has remained unable to cross the $70,000 mark, despite last week’s record milestone for spot bitcoin exchange-traded funds (ETFs), which have now surpassed $20 billion in total net inflows just 10 months after their debut. This milestone took gold ETFs nearly five years to achieve.

After averaging $420 million in daily inflows over five days, bitcoin ETFs concluded last week with a notable but reduced $273 million in inflows, according to data from Farside Investors.

"While institutional support remains robust, this deceleration in inflows suggests that momentum could weaken further if capital does not begin to flow back into the market in the coming days," BRN analyst Valentin Fournier told The Block.

Fournier said that technical indicators also point to a slowing momentum, suggesting that bitcoin may consolidate at this level before making another upward push.

"As bitcoin consolidates above $68,000, we may enter a quieter phase with lower volatility, potentially leading to renewed acceleration. However, we remain optimistic about medium-term bullish momentum and do not anticipate a trend reversal," said Fournier.