The optional contract market shows only 4% chance of Bitcoin reaching ATH this year

While many analysts are predicting Bitcoin's bull run, the options market shows that the probability of cryptocurrencies reaching a new record high in December is very low.

BTC is currently trading around $ 6,340 - down more than 200% from a record high of $ 20,000 set in December 2017.

According to Skew data, the optional contract market shows only 4% of the chances of Bitcoin surpassing the level above $ 20,000 before the end of the year.

In fact, the options market levels suggest that the likelihood of the price turning into five digits at the end of December is also quite low.


BTC ability on a five-digit level in December 2020 | Source: skew

Through the chart above, the probability of Bitcoin ending the year above $ 10,000 is 16% while the challenge rate is as high as $ 13,880 in June 2019 in December at 8-10%.

Optional contracts are derivative contracts that give the buyer the right, but not the obligation, to buy or sell the underlying asset at a specific price (known as strike price). or before the specified date. Contract option options give the buyer the option, while the buyer has the option to sell.

Probabilities are calculated using the Black-Scholes formula, based on key figures including order option prices, execution prices, prices of underlying assets, "risk-free" rates for investments. such as treasury bonds and maturity of option contracts.

Expected price increase

Many analysts believe monetary and financial measures recently announced by central banks and governments across the globe to combat the recession due to Corona will be a bode for Bitcoin.

Mike Alfred, CEO of Digital Assets Data said:

“Cryptocurrencies can reach all-time highs because the macro context is quite beneficial for Bitcoin with expected trillions of dollars of liquidity. will be put into the system ”.

According to JPMorgan, 22 countries have announced fiscal stimulus policies in the past two weeks or equivalent to 75% of global gross domestic product (GDP). Meanwhile, central banks from New Zealand to Canada reduced interest rates to zero. The US Federal Reserve also announced the asset purchase program ended on Monday.

Luuk Strijers, CCO at the crypto exchange Deribit, commented:

"This printing of money and lowering of interest rates could actually become the driving force for greater interest in Bitcoin as a hedge against fiat."

However, so far, electronic money Always try to be detached from the stock market. In fact, the positive correlation ended last week at $ 5,870 despite a US Senate decision to approve a $ 2 trillion fiscal stimulus file, which was later passed by the House of Representatives. approved and signed by President Donald Trump to enact the law.

CEO Ashish Singhal of said:

"Cryptocurrencies will continue to correlate with the stock market in the second quarter and the path of revival can only come in early Q3."

However, according to Singhal, the downward move may be limited in the near future as cryptocurrencies are considered a barrier to the government's massive inflation-boosting policies.

Bitcoin is often advertised as such a fence because the fixed supply and supply expansion rate decreases by 50% every 4 years through the halving process.

Potential increase after halving Bitcoin

"Historically, halving has led to major economic growth for Bitcoin and other cryptocurrencies," according to CEO Brandon Mintz of Bitcoin Depot ATM service provider.

Matthew Dibb, co-founder and COO of Stack Funds, hopes the reward reduction event will create pressure on Bitcoin's price increase in the next 2 months.

"Investors will look for their positions in anticipation of a rapid price rise after halving."

However, reiterate that the outlook for advance before and after halving is quite low according to optional market data.


BTC is likely above $ 6,000 until the end of April | Source: skew

While the probability of Bitcoin sustaining above $ 6,000 by the end of April is over 50%, the rate of price surpassing five numbers is only 4%. Notably, Bitcoin traded nearly $ 10,500 just 6 weeks ago.


BTC ability over $ 10,000 from June - September 2020 | Source: Skew

The probability of Bitcoin trading above $ 10,000 at the end of June is 12%. At the end of September, the probability increases to 16%.

You can see the price of BTC here.

Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Minh Anh

According to Coindesk

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