Bitcoin’s 6-Month ‘Put-Call Skew’ Flips Bearish for First Time Since May

Bitcoin’s six-month put-call skew, which measures the cost of puts – or bearish bets – relative to calls (bullish bets), has turned positive for the first time since the crash in May, indicating heightened concerns of an extended downside move.

“People appear to be bidding for downside protection [put options],” Switzerland-based data tracking platform Laevitas said. “However, we haven’t seen significant volumes yet.”
The six-month skew’s bearish turn does not necessarily imply a prolonged downtrend. With the six-month implied volatility hovering near its lifetime average of 84%, the longer duration put options appear cheap. So, traders could be buying those in a bid to make outsized gains on a potential sell-off.

The one-week, one- and three-month put-call skews flipped bearish earlier this month.
“We have seen demand for puts via risk reversals and outrights in the last week for both bitcoin and ether,” Patrick Chu, director of institutional sales and trading at the over-the-counter crypto trading firm Paradigm, told CoinDesk in a Telegram chat.
“Demand for puts was particularly strong at the $50,000 strike [price] over the last week, with more than 2000 contracts exchanging hands,” Chu said.
According tohttps://members.delphidigital.io/reports-tags/markets-macro/ Delphi Digital, pricier put options indicate participants are hedging long positions in the spot market or speculating on deeper drawdown.
Bitcoin fell more than 2% early today, hitting lows under $56,000 on concern over the spread of a new coronavirus variant. The cryptocurrency was last trading near $57,100, according to CoinDesk data.

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Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

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