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Bitcoin has failed to sustain above the $25,000 level for five of the last six days. Some techies think this isn’t necessarily a bad thing. Because the world’s largest cryptocurrency by market capitalization is forming an upward triangle structure that could explode towards the next major resistance area around $28,000.
However, some worry that this year’s gains, which have already seen BTC prices up nearly 50%, may stall. Pricing in the Bitcoin derivatives market is one way to gauge how investors feel about Bitcoin’s prospects and volatility potential. Here’s what the options market is saying right now…
Investors Neutral on BTC Price Outlook
According to the 25% delta skew of Bitcoin options expiring at 7, 30, 60, 90 and 180 days, investors are now almost net neutral in their Bitcoin price outlook. Data provided by crypto analytics firm The Block shows that all five 25% delta skews are near zero, up significantly from last year’s post-FTX collapse lows, but just below the highs recorded earlier this year. is declining to
Delta option skew of 25% is representative of the extent to which the trading desk is over- or under-billed for upside or downside protection via the put and call options it sells to investors. widely monitored as a good indicator. A put option gives the investor the right, but not the obligation, to sell the asset at a specified price, while a call option gives the investor the right, but not the obligation, to buy the asset at a specified price.
A delta option skew of 25% above 0 suggests that the desk is charging more for puts over comparable call options. This means that calls are in higher demand than puts. This can be interpreted as a bullish sign as investors are keen to secure protection against price increases.
But another options market indicator of investor sentiment shows more bullish signs. According to data presented by The Block, the open interest put/call ratio for Bitcoin options is 0.41, still very close to the record lows printed in late January/early February. The ratio means that an investor prefers to own a call option (betting that the price will go up) rather than a put option (betting that the price will go down).
Investors brace for increased volatility
According to data presented by The Block, Bitcoin’s seven-day implied volatility recently approached a monthly high, according to the At-the-Money (ATM) options market. On Saturday, it climbed to just under 60%, below its previous monthly low of 40%. Meanwhile, the 30-day ATM implied volatility is also around 60%, consistent with historical highs.
The recent rise in volatility expectations has been linked to the bitcoin market recovering from monthly lows in the $21,000 range, according to the ATM options market. Of note, Bitcoin ATM implied volatility expectations remain subdued from historical comparisons, well below the recent mid-January 2023 and his November 2022 highs. is.