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.
- 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.
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.