Bitcoin just surged past $75,000. Derivatives seem to be driving the rally.

Bitcoin's move, led by unwinding of shorts, has lifted the broader crypto market, with the CoinDesk 20 Index up 5%.

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What to know:

• Bitcoin surged above $75,000 to a high of $75,800, breaking through a long-standing resistance zone that had capped rallies several times this year.
• The latest advance is being driven largely by traders unwinding bearish put-option hedges around $55,000 to $60,000, with second-order bullish effects adding to the momentum.
• Bitcoin's move has lifted the broader crypto market, with the CoinDesk 20 Index up 5% and major altcoins such as ether, XRP and solana also posting strong gains.

Bitcoin BTC$75,622.41 surged past $75,000 early Tuesday, helped by shifting dynamics in the derivatives market.

Prices hit a high of $75,800, convincingly topping the long-term resistance corridor between $73,750 and $74,400, which reversed price trends three times since 2024, according to CoinDesk data.

The so-called bullish breakout happened as traders closed bearish short positions initiated during the early February sell-off.

"In bitcoin, the recent move has been driven largely by sizeable put selling around the $55,000 and $60,000 strikes, as traders increasingly recognized that these options were unlikely to expire in the money with only days remaining. The unwinding of these downside hedges has contributed to the latest bullish price action," Markus Thielen, founder of 10x Research, said in a note to clients.

A put option is a derivative contract that gives the right to sell the underlying asset, in this case, BTC, at a fixed price before a certain date. Traders buy puts when they think the price might fall or when they want protection against losses. It's basically an insurance against price drops, while a call option provides upside exposure.

Traders aggressively bought put options at $60,000 and lower levels in early February as bitcoin crashed, nearly hitting the $60,000 on some exchanges. However, since then, market sentiment has stabilised, forcing traders to reassess their bearish positions.

The unwinding of these bearish bets also has second-order bullish effects.

"The selling or closing of Bitcoin put options reduces downside hedging pressure and forces market makers to buy BTC to rebalance their exposure, creating supportive flows that can push prices higher," Thielen said.

CoinDesk warned last week that the rally could accelerate as prices near $75,000, largely due to market makers' expected hedging activities.

So far, however, there has not been a significant upside call buying. This suggests the move has so far been driven more by hedge unwinds than by aggressive bullish positioning, Thielen explained.

Altcoins surge

Bitcoin's rally has lifted the broader crypto market, with the CoinDesk 20 Index gaining 5% to 2,202 points over the past 24 hours.

Ether (ETH) has gained nearly 8% to $2,360, helped by increasing demand for bullish options bets. XRP (XRP) and solana (SOL) have gained 8% and 4%, respectively.

ZEC, PEPE, DOT, and VIRTUAL are other standout performers.

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