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

Participants may be hedging long positions or taking outright bearish bets on bitcoin.

AccessTimeIconNov 30, 2021 at 11:32 a.m. UTC
Updated Nov 30, 2021 at 3:32 p.m. UTC

Omkar Godbole was a senior reporter on CoinDesk's Markets team.

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 to 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 was a senior reporter on CoinDesk's Markets team.

CoinDesk - Unknown

Omkar Godbole was a senior reporter on CoinDesk's Markets team.