Activity on Bitcoin (BTC) options suggests rising bearish sentiment among investors as the asset ranges between the $29,000 and $30,000 price levels.
Bitcoin dropped to nearly $24,000 in the past week amid systemic risks within the crypto ecosystem and inflation fears in the broader market. The asset has slid for seven straight weeks as of Friday.
The asset’s price movements have been highly correlated to the U.S. markets in the past few months, with poor earnings reports and hawkish comments from the Federal Reserve (Fed) showing an impact on bitcoin prices.
Investors are placing bets accordingly.
Put/call ratios for bitcoin open interest hit a 12-month high of 0.72 yesterday, research firm Delphi said in a note Friday, adding that the data indicated “bearish sentiment among investors.” Similar ratio levels were reached last May.
“The put/call ratio measures the amount of put buying relative to calls,” Delphi analysts explained in the note. “A high put/call ratio indicates that investors are speculating whether bitcoin will continue to sell off, or it could mean investors are hedging their portfolios against a downward move.”
“Last April, the put/call ratio traded as high as 0.96 before Bitcoin’s price dropped over 50% in May 2021,” the firm added.
Put/Call ratios reached a yearly peak on Thursday. (Delphi)
Put options are a contract that gives the option buyer the right, but not the obligation, to sell a specified amount of an underlying asset at a given price. Call options, on the hand, allow call buyers to purchase the asset at a predetermined price in the future.
At the time of writing, there over 63,000 bitcoin worth of open interest on options are set to expire on May 27.
May 27 would see the expiry of over 63,000 in bitcoin options. (Skew)
Thursday’s surge in the put/call ratios surpassed previous 2022 highs of 0.69 in February, and are up 38% from one-year lows of 0.44 in December, data from analytics tool skew shows.
Crypto exchange Deribit leads options volumes with over $7 billion in open interest as of May 17. Those levels are a recovery from late last month, which saw a $2 billion plunge in open interest over two days from April 28 to April 30.
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
Recommended Content
Editors’ Picks
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days. Investors can expect XRP to kickstart a massive rally.
Optimism price outlook with nearly $90 million worth of OP tokens flooding markets on Friday
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Retail watches from the sidelines with a bias for shorts
Bitcoin could clear $73,777 peak as BTC bulls resurface. Ethereum might fall 10% before next leg up as ETH RSI teases with sell signal. XRP could lose $0.6000 threshold as Ripple bulls fail to show up.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito price action shows a potential cup and handle formation. Based on theoretical measurement rules, a successful breakout could yield a 56% rally to $6.0. A breakdown of the $3.86 support level would create a lower low for JTO and invalidate the bullish thesis.
Bitcoin: BTC may have recovered, but is it out of the woods?
Bitcoin’s (BTC) upward momentum has shown a significant decline for the past two weeks or so. This development led to a bearish signal on the weekly and an uncertain outlook on the monthly.