Bitcoin's Options Market Retains Long-Term Bull Bias Despite Sluggish Price

Options market data suggests the longer-term path of least resistance for bitcoin is to the higher side.

AccessTimeIconOct 6, 2020 at 11:52 a.m. UTC
Updated Mar 6, 2023 at 3:30 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Longer-term sentiment in bitcoin's (BTC) options market remains bullish even as the the cryptocurrency struggles to claw its way back to $11,000.

  • Bitcoin's six-month put-call skew, which measures the cost of put options (bearish bets) expiring in six months relative to calls (bullish bets), is currently seen at close to -11%, according to data source Skew.
  • In other words, demand for call options expiring in six months is outstripping demand for puts.
  • The three-month skew is also leaning bullish at -5%.
  • Since early September, skews for both these time frames have maintained a positive bias despite bitcoin's decline from $12,476 to $10,000 and more recent consolidation.
  • That consolidation is seeing bitcoin carve out a narrowing price range on the daily chart.
Bitcoin daily chart
Bitcoin daily chart
  • Triangles, or low-volatility price consolidations, usually end with a violent move on either side.
  • According to the three- and six-month skews, investors appear to be anticipating a breakout.
  • Prominent analysts like Willy Woo have also suggested the path of least resistance is on the higher side, with on-chain data showing spiking influx of new investors into the bitcoin market.
  • According to Bannockburn's chief market strategist, Marc Chandler, the U.S. dollar's long-term trend is bearish. As such, bitcoin and other dollar-denominated assets are unlikely to see big sell-offs.
  • Nevertheless, if the triangle pattern ends with a downside break, chart-driven selling may bring a re-test of September lows below $9,900.
  • Further, some investors appear to be hedging for a temporary price drop, a suggested by the positive 6.6% reading on the one-month put-call skew.
  • At press time, bitcoin is trading above $10,699, little changed since midnight UTC.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

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 offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about