BTC Hits $75k as Hedging Activity Creates Forced Demand
Bitcoin (BTC) touched $75,000 on Tuesday, boosted by hedging activities in a volatile cryptocurrency market. The price surged above $75,000, peaking near $75,800, breaking through a resistance range of $73,750 to $74,400 that had limited previous rallies since 2024.
This price movement was closely linked to derivatives activity, with analysts indicating that the rally was primarily driven by traders unwinding bearish put options rather than a significant increase in new spot purchases.
BTC has since pulled back to $74.4k amidst fluctuating trading volume. Traders noted that Bitcoin’s brief rise was mostly driven by hedging and short liquidation, rather than a clear influx of new demand.
Despite the optimistically improved backdrop from institutional buying and ETF activity, there remains a dense cluster of options around the $75,000 mark and an important options expiry at the end of March, suggesting that the upcoming market movements are likely to be volatile and sensitive to both positioning data and macroeconomic news.
Trading data showed that U.S. spot Bitcoin ETFs recorded their sixth consecutive day of net inflows on March 16, totalling $199.4 million. Since March 9, total inflows have approached $968 million, marking the longest streak of purchases this year.
This ongoing demand from products like BlackRock’s IBIT helps absorb supply and reinforces bullish momentum, indicating that institutional capital is confidently returning to the market.
The rally is boosted by derivatives trading activity. Total open interest rose by 12.19% over the past 24 hours, suggesting the entry of new leveraged positions, while short liquidations totalled $126.92 million, forcing bearish traders to cover their positions.
The immediate catalyst for these price movements appears to be the options expiry on March 27. If ETF inflows continue and Bitcoin breaks above $75,000, dealer hedging could accelerate the move toward the $78,000 to $80,000 range.
During the sell-off in February, many traders purchased put options around $55,000 to $60,000 as a hedge against potential further declines. As these put options approached expiry and were unlikely to finish in the money, traders began closing or selling them.
When puts are unwound, market makers who had hedged by holding short Bitcoin positions must buy back Bitcoin, resulting in forced buying that can accelerate upward price movement.
Analysts also note that upside call buying remains relatively low, suggesting the current rally is still primarily driven by the removal of downside hedges rather than a strong surge of bullish conviction.
While the data shows ETF inflows and some corporate accumulation improving the market backdrop, it does not yet indicate a definitive breakout phase. Hedging activity can push prices up quickly, but if new buyers do not enter the market, these gains may prove fragile once the hedges are unwound.
