Bitcoin's recent price appreciation has been encouraged by a reduction in BTC options open interest at specific strike prices, according to an analyst.

"Much less open interest at the $40,000 level could be encouraging bitcoin's recent uptick, with comparably limited supply of delta from hedgers suddenly bereft of optionality to lean against at the big figure," crypto derivatives trader Gordon Grant told The Block.

Grant said that following the expiration of end-of-month options on Friday, Jan. 26, there was a significant decrease in open interest for short-dated bitcoin derivatives, particularly options.

This is in contrast to the run-up to last Friday's options expiry, when "an excess of local gamma could have constrained the price of the underlying asset after a short, sharp …