Bitcoin Options Open Interest Nears All Time High – But Rise in Puts Could Presage Drop

While soaring open interest can be a sign of a continuing trend, the offloading of calls suggests bitcoin could correct further.

AccessTimeIconAug 21, 2020 at 10:48 a.m. UTC
Updated Sep 14, 2021 at 9:46 a.m. UTC
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While open positions in bitcoin (BTC) options have risen to near record-high levels, it's not necessarily a good thing for those hoping for the rally in the cryptocurrency to continue.

  • The total number of outstanding BTC options contracts – or open interest (OI) – increased to $2.10 billion Thursday – just shy of the all-time high of $2.11 billion in late July, per data from Skew. 
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  • On its own, high open interest can indicate existing trends are likely to be sustained – suggesting BTC's recent rally from $10,650 could continue.
  • But the number of bearish puts relative to bullish calls has recovered from -10.3% to -3% in the past four days. As the graph below shows – traders are offloading much of their call options onto the market.
Bitcoin options' positioning since 00:00 UTC
Bitcoin options' positioning since 00:00 UTC
  • This suggests bullish speculation is beginning to ease – a sign of investors anticipating consolidation or price drop
  • Indeed, BTC has already pulled back more than 5% from the 13-month high above $12,400 it reached on Monday. 
  • Unless buying action comes quick, downwards momentum could push prices down to $11,000, QCP noted earlier this week.

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