Bitcoin once again surpassed $40,000 last night, and the market rebounded across the board, showing an unusually vigorous trend. According to data from the crypto derivatives research website Skew, options market data shows that investors tend to be optimistic about the market's continued rebound. The probability of Bitcoin breaking through $50,000 before the monthly expiration date of January 29 is 20%.
The option probability is calculated using the Black-Scholes formula based on key indicators such as the price of the call option, the exercise price, the price of the underlying asset, the "risk-free" interest rate of investments such as US Treasury bonds, and the expiry time.
An option is a derivative contract that gives the buyer the right rather than the obligation to purchase the underlying asset at a predetermined price on or before a specific date. Call options represent the right to buy, and put options give the right to sell.
At present, there are only two weeks before the end of the month, and Bitcoin needs a 30% increase from 50,000 USD, which makes this goal very challenging. However, this is not impossible. In the first more than one week at the beginning of this year, the price of Bitcoin has risen from less than $30,000 to over $40,000; and in the last two weeks of 2020, the price of Bitcoin has increased from US$19,000 rose to US$29,000, an increase of more than 50%.
From the trend chart, after failing to test the pressure level of 40,000 US dollars, Bitcoin began to retreat, broke the upward trend line, and began to rebound from the important support level of 37,500 US dollars. The follow-up is expected to be tested again, and the important position is at 39,500 US dollars. If it fails again, the trend of the market may come to an end; if it succeeds, it will reach a new high again and move toward 50,000 US dollars.
The most recent trend is undoubtedly the Polkadot ecology and DEFI concept currency, which will also become the main line of the market throughout 2021, and I believe there will be many high-quality targets. But for most investors, they only need to seize the lead to outperform the market.