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Bitcoin Options Suggest Investors Hedging but Still Long-Term Bullish

Bitcoin's options market retains long-term bullish bias despite the recent price pullback, data shows.

Sep 8, 2020 at 10:53 a.m. UTC
Updated Sep 14, 2021 at 9:53 a.m. UTC

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.

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