• Bitcoin options markets are sending bullish signals, with the 25% delta skew remaining above zero since mid-January and the Open Interest Put/Call Ratio hovering near its lowest since January 2022.
• These signals indicate that investors are anticipating further upside in the BTC price, showing strong sentiment towards the world’s largest cryptocurrency by market capitalization.
• The sustained rise in Bitcoin’s 25% delta option skew and the Open Interest Put/Call Ratio suggest that investor sentiment has taken a substantial turn for the better in January.
The recent developments in the Bitcoin (BTC) options markets are providing investors with bullish signals. The 25% delta skew, which is a popularly monitored proxy for the degree to which trading desks are over or undercharging for upside or downside protection, has remained above zero since mid-January. This suggests that investors are eager to secure protection against (or bet on) a rise in prices, indicating that there is higher demand for calls versus puts.
The Open Interest Put/Call Ratio is another indicator that is also signaling a recovery in sentiment towards the world’s largest cryptocurrency by market capitalization. The ratio between open BTC put and call options on derivatives exchange Deribit was last at 0.46, close to its lowest since January 2022. This is in stark contrast to the spike to 0.61 in the immediate aftermath of the FTX cryptocurrency’s collapse in early November.
The implications of these signals are that investors are anticipating further upside in the BTC price. The sustained rise in Bitcoin’s 25% delta option skew and the Open Interest Put/Call Ratio suggest that investor sentiment has taken a substantial turn for the better in January. This is encouraging news for the crypto market, as the bullish sentiment is likely to translate into price action over the coming weeks and months.
It is also worth noting that these bullish signals come at a time when Bitcoin is still trading below its all-time high of $20,000. This suggests that there is still plenty of room for the BTC price to move higher, especially if investors continue to show confidence in the cryptocurrency.
In conclusion, it appears that the Bitcoin options markets are sending strong bullish signals. This is likely to translate into positive price action for Bitcoin in the near future, as investors anticipate further upside potential.