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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.
Updated Mar 6, 2023, 3:30 p.m. Published Oct 6, 2020, 11:52 a.m.
Longer-term sentiment in bitcoin's options market remains bullish even as the the cryptocurrency struggles to claw its way back to $11,000.
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- 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.
Also read: BitMEX Ether Futures Trading Contracts Fall by Half in Wake of US Charges
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