Bitcoin Momentum Builds on $2.3bn ETF Inflows; Options Market Points Up

Exchange-traded funds (ETFs) absorbed $2.3 billion to track the world’s largest cryptocurrency, the strongest weekly inflow since July and the fifth largest this year, data from Farside show. This marks a sharp contrast with August, when the funds posted more than $1.7 billion of outflows over a two-week period.

(Source: Farside)

Investors also increased their leveraged trades of futures contracts alongside the spot buying. Open interest (OI) rose 6% week-on-week to $55.4 billion, recovering from the August drawdown when OI had slipped as low as $51.1 billion. The steady pickup in futures exposure in September has been leaning heavily towards call options, which give the owner of a contract the right to buy an asset at a certain price by a specific time: Deribit reports $27 billion in open interest against $17 billion in puts (rights to sell). 

Traders appear to be going long, based on the concentration of strike prices at $120,000, $130,000, and $140,000, which together account for more than $6 billion in call volume. This distribution points to positioning for further gains rather than hedging the risk of a decline in the market.

(Source: Coinmetrics)

Taken together, the combination of strong institutional spot inflows, recovering futures leverage, and call-skewed options markets reflects a constructive sentiment backdrop. Sustaining momentum, however, will likely depend on continued spot demand to validate the higher-strike options positioning.