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Bitcoin Option Traders Now Betting on Short-Term Price Drop

With bitcoin looking heavy this week, short-term sentiment in the options market has flipped bearish.

By Omkar Godbole
AccessTimeIconJul 16, 2020 at 12:06 p.m. UTC
Updated Sep 14, 2021 at 9:31 a.m. UTC
(thatkasem14/Shutterstock)
(thatkasem14/Shutterstock)
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With bitcoin looking heavy this week, short-term sentiment in the options market has flipped bearish.

  • The leading cryptocurrency by market value fell to $9,070 soon before press time, reversing the 2.5% rise to $9,450 seen last week, according to CoinDesk’s Bitcoin Price Index.
  • Prices are now closing on the lower end of the multi-week-long trading range of $9,000–$10,000.
  • Reflecting the downward trend, the one-month put-call skew for bitcoin options, a metric that measures the price of (bearish) put options relative to (bullish) call options, has risen to 4.9%, according to data provided by crypto derivatives research firm Skew.
  • The positive number indicates short-term put options are drawing higher prices than calls.
  • Traders, the data suggests, are making speculative bets to the downside or are hedging against a potential bearish move (that is, buying puts against long positions in the spot market), Shaun Phoon, senior trader at QCP Capital, told CoinDesk.
One-month put-call skew for bitcoin options
One-month put-call skew for bitcoin options
  • The one-month skew was hovering at lows below -7% a week ago, indicating stronger demand for call options – a sign of bullish bias in the options market.
  • While the one-month skew is now more bearish, the six-month skew remains below zero or bullish.
  • Demand for call options expiring in December is still higher than that for puts.
  • The three-month skew is hovering in the neutral zone near 0%.
BTC three- and six-month skews
BTC three- and six-month skews

Also read: Bitcoin Option Traders Bet on Bullish Move Following Volatility Squeeze

Disclosure: The author holds no cryptocurrency assets at the time of writing.

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CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

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