- November 18, 2023
- Posted by: [email protected]
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Markus Thielen, the head of research at Matrixport and founder of DeFi Research, has provided a bullish outlook for Bitcoin, projecting a surge to $40,000 by the end of the year. His optimistic stance is grounded in several key factors, the combination of which he believes will propel Bitcoin’s current upward momentum to new heights.
One significant element in Thielen’s prediction is the observed demand for call options, derivatives that grant the buyer the right to purchase the underlying asset at a predetermined price in the future. As Bitcoin has experienced a notable surge in recent weeks, especially in the past month, the demand for these bullish bets has increased. Market makers, who traditionally take the opposite side of client trades, find themselves exposed to further upside potential in the cryptocurrency market. Thielen anticipates that, as Bitcoin’s prices continue to climb, these entities will engage in purchasing Bitcoin to hedge their positions, contributing to an overall bullish trend.
The options market plays a pivotal role in Thielen’s forecast, with substantial options expiries scheduled for November 24 and December 29. Notably, open interest for these expiries stands at $3.7 billion and $5.4 billion, respectively. The preeminence of outstanding call options over puts, particularly with the $40,000 strike price holding significant open interest, suggests that approaching the $40,000 level will trigger additional Bitcoin purchases as participants seek to hedge their positions.
Beyond the options market, Thielen considers the broader economic landscape. He points to the receding U.S. inflation rate and the possibility of rate cuts or liquidity easing by the Federal Reserve (Fed). Despite the Fed having raised interest rates earlier to combat inflation, recent signs of slowing inflation have led to speculation about potential rate cuts. Thielen asserts that a spread of 2.0% between the inflation rate (Consumer Price Index, or CPI) and interest rates could prompt a 200 basis point rate cut in the coming year, a scenario that would be favorable for Bitcoin.
Moreover, optimism surrounds the potential approval of spot exchange-traded funds (ETFs), with Bloomberg analysts assigning a 90% likelihood of the Securities and Exchange Commission (SEC) approving one or more spot ETFs before January 10. Thielen sees this development as another positive catalyst that could drive Bitcoin prices higher.
Markus Thielen’s bullish outlook for Bitcoin is underpinned by a combination of factors, including heightened demand for call options, the dynamics of the options market, expectations of potential rate cuts by the Fed, and the possibility of spot ETF approvals. This multifaceted analysis leads Thielen to project a robust upward trajectory for Bitcoin, aiming for a target of $40,000 and potentially even $45,000 by the end of the year.
