$420 Million in Call Options as Bitcoin Rebounds From $75,700
Key Facts
Bitcoin fell to $75,700 after the US midterm elections before rebounding above $78,300 within hours on November 4, according to BeInCrypto. EL7 data recorded its close at $78,431.26 that day. The move came after Democrats won majorities in both chambers of Congress, according to the Associated Press. Market reports linked the decline to investor concerns about the political results, followed by a rapid rebound. The price action shows sharp volatility during the session, but by itself does not establish a lasting support level.
Options contracts were active alongside the elections, with block trading in Bitcoin options reaching $660 million on election day, double the previous day's level, according to BeInCrypto. Flows included traders buying about $420 million in call options and selling $105 million worth of the same type of contract. Call options provide exposure to the possibility of a rise in Bitcoin's price, reflecting a bullish tilt in options positioning. But these figures describe derivatives-market activity and do not prove that call-option purchases caused the rebound. Nor do they alone mean that spot demand recovered or that selling pressure ended.
BeInCrypto said the decline forced some bullish-position holders to close out, then the rebound led to liquidations of traders betting on further losses. In the broader liquidation wave, positions worth about $396 million were closed in the cryptocurrency market over 24 hours through the evening of November 3, according to a CoinLab summary. The liquidations involved 96,160 traders, including $322 million in long positions. These figures describe the volume of positions forcibly closed during the cited period, not the sole cause of Bitcoin's price move. The account shows how price volatility put pressure on bets in both directions over a short period.
The elections added a political backdrop to market moves, with preliminary results showing the possibility that Democrats would control both chambers of Congress, according to CoinDesk. The report said investors saw this as a potential for tighter regulatory scrutiny and cited opposition to the CLARITY Act as a source of concern for the cryptocurrency industry. In a technical indicator cited by BeInCrypto, Bitcoin's relative strength index fell to 13 on November 3, before the rebound. BeInCrypto cited a Bitfinex analysis saying $81,300 represents resistance, based on large Bitcoin holdings purchased above that level. A Bitfinex analysis published on November 2 had said weak spot demand and pressure from technology stocks made the recovery's durability uncertain.
Attention is turning to the options expiry scheduled for Friday, November 6, when contracts on 30,328 Bitcoin are due to expire, according to a CoinLab summary. The summary estimated the maximum pain level for the expiry at $79,000. The date comes two days after the decline and rebound recorded on November 4. Bitcoin's daily close that day was $78,431.26, according to EL7 data. Price levels and expiry timing are market factors to watch, while the rebound alone does not determine how long the recovery will last.