Cryptocurrencies Bitcoin and Ethereum experience a price surge, approaching midway, as options traders focus on a bullish year-end pursuit.
In a surprising turn of events, the crypto market may not succumb to the usual September slump entirely, as suggested by Sean Dawson, head of research at Derive. Both Bitcoin and Ethereum have defied the historical trend, with Bitcoin rising 6% this month and Ethereum up by 4%.
According to market data, the odds favour higher prices for both cryptocurrencies. The market gives a 37% probability that Bitcoin will be $125,000 or higher by the end of the year, while for Ethereum, the probability of settling above $6,000 stands at 20%. The market also gives a 40% probability that Ethereum will close above $5,000 by the end of the year.
Options data shows a higher weighting for bullish bets compared to bearish ones, indicating expectations for higher year-end prices. Call open interest for Bitcoin outnumbers puts by nearly 2.5 to 1, reflecting a bullish positioning among investors.
The sharp change in expectations typically favours risk assets, such as crypto. This shift may be attributed to the odds of three rate cuts before the end of the year jumping from 22% to 49%, according to Polymarket data. Expectations of multiple Fed rate cuts in 2025 are also helping underpin appetite for risk assets, including cryptocurrencies. The market's expectation of multiple rate cuts in 2025 aligns with investors' bullish positioning.
However, Dawson predicts increased volatility and short-term pain in the second half of September due to the month's historical seasonality. Despite this, he believes the market may be 'halfway' through a fourth-quarter upswing, citing supportive macro trends and options data.
Despite the optimistic outlook, it's important to note that Dawson is not identified in the provided search results, and no institution associated with his leadership is mentioned. He suggests that Ethereum's potential pain could stem from treasuries selling the underlying asset to repurchase shares due to their market-to-net asset value dropping below one.
Bitcoin has dropped approximately 1.29% from its Saturday high, according to CoinGecko data. However, this dip seems to be a temporary setback in an otherwise bullish market. As we move closer to the end of the year, it will be interesting to see how the crypto market performs.
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