Bitcoin Options Suggest Investors Hedging but Still Long-Term Bullish
Bitcoin's options market retains long-term bullish bias despite the recent price pullback.
- According to data source Skew, the six-month put-call skew, which measures the value of puts, or bearish bets, relative to that of calls, bullish bets, is currently seen at -10%.
- The negative number indicates the call options expiring six months from now are drawing higher prices or demand than puts.
Bitcoin put-call skew
- The six-month skew shows bitcoin's pullback from $12,400 to $10,000 seen in the past three weeks has failed to weaken investor confidence in the cryptocurrency's long-term prospects.
- However, the one-month skew has crossed above zero, a sign of investors adding put options to position for a deeper short-term price decline.
- Bitcoin has developed a sensitivity to traditional markets over the past six months.
- Hence, a notable drop in the global equity markets could yield a stronger pullback in bitcoin, as noted by blockchain intelligence firm Glassnode.
- Major European stocks are nursing losses on Tuesday, with U.S. equity index futures pointing to a risk aversion on Wall Street. Futures tied to the Nasdaq index are down over 200 points at press time.
- Bitcoin is currently trading near $10,030, having faced rejection above $10,400 during the Asian trading hours.
- On a month-to-date basis, the cryptocurrency is down over 13%.
- Still, sellers have failed to establish a foothold below $10,000 in four of the past five trading days.
- "Overall local daily fluctuations look typical to non-directional movement. Lots of liquidity hunting, long-wicked [daily] candles prints the overall idea of a bottom-forming process," said Adrian Zdunczyk, a chartered market technician and CEO of trading community The BIRB Nest.
DISCLOSURE
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
