When the price of an asset hits a new all-time high, momentum traders plow in as they sense an opportunity to ride the trade higher. The same was seen after Bitcoin (BTC) price broke above the $20,000 mark on Dec. 16. By Dec. 19, the price had hit an intraday high at $24,197.46, a 21% rally in four days.
These sharp moves in Bitcoin price attract traders who use derivatives to try and amplify their gains or hedge their existing positions by buying downside protection. This resulted in the open interest on Bitcoin options hitting a new all-time high at $6.5 billion earlier this week.