The price of Bitcoin has surged past the $120,000 mark, with the market providing solid data instead of mere speculation.
The spot price broke through the critical $120,000 threshold on October 2, closing near $120,606 after a notable +5.5% increase from September 29. It’s maintaining this level today despite a slight retreat. This rise in spot price is not a singular event.
Bitcoin ETFs reported two consecutive days of significant net creations, totaling approximately $676 million on October 1 and $627 million on October 2, following a turbulent period of outflows around September 25-26.
Simultaneously, futures and options quickly rebounded into October: BTC futures open interest increased from $77.22 billion on September 29 to $88.52 billion by October 3, while options OI rose from $41.58 billion to $52.06 billion. Volume surged as well, with futures turnover increasing from $48.59 billion on September 29 to $111.22 billion on October 2, alongside heightened exchange activity in the middle of the week.
This combination of spot demand through creations, fresh derivatives engagement, and substantial turnover sets up the prospect of more upside in Q4.
The late-September ETF shakeout is significant as it reset positioning and swiftly shifted back to creations. When consecutive days see net inflows above $600 million, the primary market absorbs coins, compelling authorized participants to source BTC.
This tightening effects price changes more swiftly than it appears in headlines. It also influences intraday liquidity: spreads tend to narrow when creations are active, with arbitrage becoming a two-way street once again.
If the flow remains net positive heading into next week, the spot market won’t need exceptional efforts from perpetuals to sustain $120,000; it just requires the creation process to continue effectively.
The increase in futures OI during this timeframe is not simply short covering, as OI doesn’t surge by +$11.3 billion over four sessions without new positions being established. Coupled with the spike in volume (back-to-back $100+ billion days on October 2-3 across various platforms), this illustrates classic “adding risk during strength” behavior.
Options present a similar narrative: +$10.5 billion in OI since September 29 pushes dealers into larger hedging parameters, which can mitigate intraday fluctuations around crucial strikes and, depending on distribution, pin price near high-gamma areas. If $120,000-$122,000 sees increased open interest into next week, anticipate stickier price behavior when the market approaches these levels until a new block of calls or puts clears the path.
Funding is the third component, with the last week indicating a distinct shift in premiums. Perpetual funding ran negative on September 27-28 (-0.12% and -0.07% daily), then became positive and accelerated into October: +0.20% on September 29, +0.63% on September 30, +0.38% on October 1, peaking at +0.79% on October 2 and maintaining a high +0.67% on October 3.
The 7-day average rests around +0.35% per day, but the last three data points show a significantly higher average of +0.61%.
When combined with the +$11.3 billion increase in futures OI, it indicates that longs are paying a premium, and leverage is piling on. This is favorable as long as ETF creations continue to draw coins and the spot-futures basis widens in a stable manner.
If creations wane while funding remains elevated, the carry might become a burden for longs, making them susceptible to quick mean reversion or a clean-out. Conversely, if creations stay positive, the market can absorb these funding levels without triggering a squeeze.
What factors will impact price from here?
First, the ETFs. The late-September outflows signaled distribution, while the recovery on October 1 indicated renewed demand. If daily totals stabilize in the $200-$400 million range, $120,000 should function more as a floor than a ceiling.
Second, the spot-futures basis. The increase in futures OI alongside spot strength is constructive, provided the basis doesn’t become congested. A gradually widening basis serves as fuel for orderly upward movements; a sudden spike while ETF flows cool is a warning that carry might be over-extended.
Third, options positioning leading into mid-October. The market has just rebuilt $10+ billion of OI in a few days; if that concentration stabilizes around a narrow strike range, anticipate more “magnet” price action and reduced realized volatility until a catalyst disrupts the pin.
By monitoring these three indicators, a clear market structure emerges for Q4. Creations reveal whether real coins are exiting the open market. Futures OI and basis indicate how much leverage is layered and how stable it is. Options OI and dealer gamma signal where intraday ranges will contract or break.
Currently, the outlook is positive: price has reclaimed $120,000 with consecutive ETF creations, futures risk has been added rather than mitigated, and options depth is increasing. If funding remains stable and net creations persist, dips into the low-$120,000s should attract buyers.
If creations plateau while funding rises and basis gaps widen, expect a more volatile market and quicker mean reversion. Q4 begins with favorable conditions, but the key indicators to watch are creations, basis, and the options bands surrounding $120,000.
