Bitcoin Options Suggest Investors Hedging but Still Long-Term Bullish
Taking the long view (PanyaStudio/Shutterstock)
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 that the call options expiring six months from now are drawing higher prices or demand than puts.
- 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.
Disclosure
The leader in blockchain news, 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.
