The Cryptocurrency Market Reacts to Political Promises
In an unexpected twist, Bitcoin (BTC) and the broader cryptocurrency market have experienced a significant bullish surge, prompted by former President Donald Trump’s recent announcement regarding a strategic crypto reserve. Trump’s declaration of five key tokens to be included in this reserve has reignited investor enthusiasm, particularly for BTC, which has seen its price skyrocket by nearly 10% in just 24 hours.
BTC’s Impressive Price Climb
As reported by CoinDesk, Bitcoin reached a high of over $95,000 during this period, reflecting a solid recovery in market confidence. Notably, other cryptocurrencies mentioned by Trump—namely Ethereum (ETH), Ripple (XRP), Solana (SOL), and Cardano (ADA)—also recorded substantial gains, amplifying the bullish sentiment across the market.
Trump’s Vision for a Crypto Reserve
On Sunday, Trump took to Truth Social to announce his directive to the Presidential Working Group to advance a strategic crypto reserve that prominently features Bitcoin and Ethereum, alongside XRP, SOL, and ADA. This announcement was met with enthusiasm from market participants, especially given the previous frustrations over the lack of swift action since Trump took office on January 20.
The “Trump Put” Effect
This announcement has been interpreted by many as a sign of the “Trump put” on cryptocurrencies, suggesting that the Trump administration may step in to support the crypto market during turbulent times, similar to how the Federal Reserve intervenes in the stock market. Trader and analyst Alex Kruger remarked on X that Trump’s signal might indicate a trend change for BTC, especially as it broke through resistance levels amidst generally low market sentiment.
Key Support Levels Established
Kruger further noted that Bitcoin has re-established $89,000 and $92,000 as critical support levels, encouraging traders to consider long positions with clear invalidation points below these thresholds. Market analyst Josh Gilbert from eToro echoed this sentiment, highlighting the potential for ongoing support during sell-offs, given the President’s vested interests in the crypto landscape.
Surge in $100K Call Options
In light of this renewed optimism, there has been a surge in activity surrounding $100,000 strike call options, signaling that traders are betting on further price increases despite ongoing market volatility. A call option grants the buyer the right to purchase an underlying asset at a predetermined price before a specific date, providing asymmetric upside potential.
According to data from Amberdata, open interest in the $100K call options has increased by 1,163 contracts, amounting to over $100 million—making it the most sought-after option on Deribit. Greg Magadini, director of derivatives at Amberdata, noted that the $100K level will be a focal point for traders in the coming week, especially in light of the upcoming crypto summit on March 7.
Revival of Call Options Demand
The renewed interest in call options is also reflected in the recovery of short-term skews, which measure the implied volatility premium for calls compared to puts. As reported, the seven-, 30-, and 60-day skews have all bounced back to neutral or positive territory, a significant change from the negative readings seen earlier when traders were heavily pursuing protective put options.
Challenges Ahead: A Cautious Perspective
Despite the bullish atmosphere, some market observers express caution regarding the actual implementation of the proposed crypto reserve. Arthur Hayes, co-founder of Maelstrom Fund, voiced skepticism on X, emphasizing that Trump’s announcement is merely verbal and lacks concrete financial backing. He stressed the need for congressional approval for funding, which remains uncertain.
Concerns Over Execution and Regulation
Other industry leaders, including Ben Zhou, CEO of Bybit, shared similar reservations regarding the execution of Trump’s crypto reserve plan. While there is a broadly bullish sentiment following the announcement, concerns linger about the necessary regulatory frameworks and the macroeconomic environment that could influence the sustainability of the current rally.
Looking Forward to the Crypto Summit
Mark Hiriart, head of sales at digital asset trading firm Zerocap, pointed out that while institutional interest may surge, the clarity of regulations and broader economic conditions will be crucial in determining whether this rally holds. All eyes are now on the White House Crypto Summit on March 7, where further details on the crypto reserve could emerge, potentially shaping the future of the cryptocurrency landscape.
