An analysis from trading firm QCP Research has identified what could have fueled the Bitcoin rebound on Monday, further highlighting subsequent scenarios.
For context, Bitcoin rallied past $90,000 earlier on Monday. It reached an intraday high of $90,330 before a substantial pullback to the current market price of around $87,000.
But what caused the Asian time rally, and why does it matter? An analysis from QCP Research has shed some light on this development.
Spot and Perpetual-Fueled Bitcoin Rally
Specifically, analysis at the firm highlighted that Bitcoin rallied by 2.6% during the Asian market session, a price action similar to that seen on Boxing Day. Notably, BTC jumped from $87,200 to $89,500 during the same market session before relinquishing most of its gains as the US market opened.
Meanwhile, the rally today caught attention because it occurred during the holiday period, when liquidity is usually low. With BTC now relinquishing all of its earlier gains, it is on course to end the same way it did three days ago.
On the catalyst for the rally, QCP wrote that with just $40 million in leveraged long liquidations, it does not seem like liquidation is the driver for this short-lived rally to $90,000. However, the firm pinned it on spot and perpetual accumulations under the meager market liquidity conditions.
Particularly, some might come from Strategy’s accumulation activity. Recall that executive chairman Michael Saylor hinted at buying Bitcoin yesterday, with the firm announcing a 1,229 BTC acquisition worth $108 million today.
Derivative Activities: A Contributing Factor
Further, QCP noted that after over $27 billion worth of BTC and ETH options expired on Deribit last Friday, funding rates on the exchange rose above 30% from nothing. The firm emphasized that this suggests that option traders who were previously long gamma have switched to short gamma, betting on Bitcoin upside.
Consequently, these growing call positions are forcing participants to buy spot Bitcoin or other close-to-expiry calls, indirectly encouraging BTC accumulation. Notably, exchange data further supports this narrative, as users aggressively opened long Bitcoin positions today and bought the “BTC-2 JAN 26 94K” call.
Why Does It Matter for Bitcoin?
Remarkably, QCP emphasized that the continued Bitcoin demand and spot buying improve the chances of a gamma-driven squeeze. A push past $94,000 would further increase the delta of call options, fuel more dealer BTC acquisition, and, consequently, push the asset’s price further upward.
The reduction of put options further adds to the bullish outlook, particularly as Bitcoin’s resilience above $86,000 has slowed user appetite towards the December 85K put. Furthermore, with large capital from the Friday options expiration lying idle, participants could soon start reallocating to the market again, increasing volatility.
Nonetheless, QCP stated that taking a stance on BTC solely based on options positioning data may be “premature.” Additionally, it called for caution, as the crypto market has clearly lacked direction as the year winds down.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
