Trust in Bitcoin? A stock market offers options for a price of $40,000

Do you have full confidence in the price of bitcoin (BTC)? Then you can take a guess via the Deribit derivatives exchange: the trading platform offers options for traders to speculate on a price of $40,000.

There are two options at Deribit that have been created specifically for these large price rises. One contract expires in March 2021, the other in June 2021. That is what Skew reports.

Bitcoin options

Options are derivative contracts that give the buyer the right (not the obligation) to buy (call) or sell (put) an underlying asset at a predetermined price on or before a specific date.

In both cases the same applies: if you think that in that period BTC at $40,000 then these are interesting options. You can of course also buy bitcoin instead of speculating on a specific price around a specific time.

In practice this is an option for traders who are bullish.

Traders

With these kinds of options you speculate purely on the bitcoin price, you have little to do with real bitcoin. You can lose or make money with it, but you only speculate on the price of BTC. At no time do you have bitcoin in your hands.

Option trading in the world of BTC is growing steadily. Bitcoin futures platform CME set a new record earlier this month: $790 million in open interest.

It allows speculators from all over the world to speculate on the bitcoin price without buying bitcoin themselves.

Timing

The timing of derivatives of this kind is good, there is hope in the market that we have not yet surpassed it. The price even shot through the $14,000 mark today. While parties like PayPal are now also entering the battlefield of bitcoin: PayPal is opening the doors for Bitcoin: Payment, trading and storage.