Bitcoin Approaches $100,000 as Traders Favor Riskier Bets on MSTX
The broader crypto market anticipates Bitcoin approaching the $100,000 mark, attracting traders aiming to increase their capital.
To capitalize on this potential, traders are utilizing the Defiance Daily 2X Long MSTR ETF, a leveraged fund linked to MicroStrategy’s stock. As Bitcoin climbs, traders are leveraging this ETF and its options for higher profits, embracing high-risk strategies.
Bitcoin Surge Drives Traders to Take Riskier Bets
Bitcoin's ascent toward $100,000 has increased trading activity as many seek higher returns through leveraged products.
The Defiance Daily Target 2X Long MSTR ETF, trading as MSTX on Nasdaq, has gained traction. It aims to deliver 200% of MicroStrategy’s daily stock performance, making it attractive for those betting on Bitcoin’s rise.
MicroStrategy’s stock, significantly influenced by its extensive Bitcoin holdings, has garnered attention. Recently, MicroStrategy shares rose 10% to $473, causing the ETF to surge 20%, briefly exceeding $180. This increase stimulated activity in the options market, with traders eager to maximize gains.
As the MSTX ETF rises, traders are gravitating towards deep out-of-the-money (OTM) call options. Priced lower than near-the-money options, these provide substantial upside when the ETF grows. A notable contract focuses on the $230 strike price, showing strong demand across various expiry dates, including a long-term contract set for June 2025.
Deep OTM calls allow traders to control significant portions of the underlying asset with minimal upfront costs. Continued ETF growth could yield considerable returns, appealing to those looking to profit from Bitcoin's advance.
Bullish Sentiment at Record Highs
The demand for these options has driven call premiums to unprecedented levels, significantly surpassing put options used for downside protection.
This extreme bullish sentiment reflects trends seen in other crypto products, such as CME and Deribit options linked to Bitcoin ETFs from BlackRock Inc (NYSE: BLK). Growing speculation indicates retail investors are heavily invested, often preceding market corrections when speculative bubbles burst.
The excitement extends beyond Bitcoin’s price, fueled by expectations of favorable policies under President-elect Donald Trump and anticipated Fed rate cuts. These factors enhance the belief in Bitcoin’s continued upward movement. With Bitcoin surpassing $97,000 this week, many expect further rally potential.
Central to this market activity is MicroStrategy Inc (NASDAQ: MSTR), the largest publicly traded holder of Bitcoin. The company owns 331,200 BTC, valued at approximately $3.04 billion, acquired steadily since 2020. Its stock, closely tied to Bitcoin's price, has become a favored option for leveraged bets on cryptocurrency's future.