Crypto enthusiasts are on the edge of their seats as Bitcoin teases a potential surge. Alex Thorn, Head of Firmwide Research, suggests that a pivotal moment is approaching, with Bitcoin’s price eyeing the $35,750 to $36,000 resistance level. Thorn emphasizes the importance of this price zone, as it represents a key liquidation barrier closely monitored by derivatives traders.

Bullish Momentum Awaits a Breakthrough

Should the bulls gain the upper hand and breach this resistance, the crypto market may experience a significant uptick in demand. Thorn draws parallels between the current Bitcoin setup and the explosive events of the past week. While Bitcoin’s current spot rates remain stable, they hover around 2023 highs, with buyers anticipating further gains amid improving market sentiment.

Bitcoin price on October 30| Source: BTCUSDT on Binance, TradingView

While many are fixated on the potential approval of a spot Bitcoin Exchange-Traded Fund (ETF) by the United States Securities and Exchange Commission (SEC) as a catalyst for the next rally, Thorn has his eyes firmly fixed on the derivatives market. According to his analysis, options traders will play a pivotal role in driving the next bull run.

The $36,000 Threshold Explained

Thorn’s assessment suggests that once Bitcoin breaches the $35,750 to $36,000 zone, options dealers will need to purchase $20 million worth of spot BTC for every 1% increase in price. This surge in spot BTC buying stems from the need for options dealers to maintain a “delta neutral” position following a “gamma squeeze,” which previously drove prices higher.

Bitcoin gamma profile|Source: Alex Thorn on X

A gamma squeeze occurs when a surge in call (buy) options purchases compels options dealers, primarily market makers, to buy the underlying asset, which, in this case, is Bitcoin. This buying is done to hedge their positions and maintain a delta-neutral stance. The technical analysis points towards a potential gamma squeeze due to the current setup and trends, particularly in the daily chart.

Mixed Metrics, but a Healthy Position

Thorn also observes a discrepancy in the supply held by speculators and long-term holders, indicating potential dwindling on-chain liquidity. However, the Z-Score ratio of market price to realized price paints a positive picture, suggesting that Bitcoin is in a “healthy” position.

As of October 30, Bitcoin is in a bullish breakout formation, with traders exhibiting strong bullish sentiment. The sustainability of this upward trend hinges on whether buyers can push the coin past recent highs, keeping it clear of the breakout level around $32,000. Crypto enthusiasts eagerly await the outcome as Bitcoin stands at the precipice of a potentially remarkable bull run.