Bitcoin The options markets continue to indicate that investors are anticipating further growth in the BTC price. widely followed, according to a chart on The Block Bitcoin The 25% delta skew has remained above zero since mid-January and recently reached its highest level since Q4 2021 near 6.0.
The 25% delta option skew is a popular monitored proxy of the extent to which trading desks are charging investors more or less for the upside or downside protection through put and call options being sold. A put option gives an investor the right but not the obligation to sell an asset at a predetermined price, while a call option gives an investor the right but not the obligation to buy an asset at a predetermined price.
A 25% delta option skew above 0 suggests that desks are charging more for equivalent call options versus puts. This implies that demand for calls versus puts is higher, which can be interpreted as a bullish sign as investors are more eager to hedge (or bet) a security against a rise in prices.
The open interest put/call ratio also points to a strong BTC sentiment
steady increase in of bitcoin The 25% delta options skew is a sign that investor sentiment towards the world’s largest cryptocurrency by market capitalization has taken a substantial turn for the better in January. Another options market indicator called Open Interest Put/Call Ratio is also showing signs of recovery in sentiment.
According to a chart on the block, the ratio between open B T c Put and call options on derivatives exchange Deribit were last traded at Rs 0.46, the lowest since January 2022. It rose to 0.61 immediately after the collapse of the FTX cryptocurrency in early November.
Investors Betting That the Bear Market Is Over?
The bullish signals about the kind of safety investors are seeking in the bitcoin options market add to a growing list of reasons why investors, analysts, and commentators alike are of the view that bitcoin’s price will continue to decline. The latest rally may not be just another so-called “bear market rally”, as happened repeatedly in 2022, but it could be the start of a broader market recovery.
as recently covered ArticleSix of the eight indicators looked at by analysts on crypto data analytics platform Glassnode to identify when bitcoin is breaking out of a bear market are flashing bullish signs, and the seventh is likely to turn green soon as well.
Meanwhile, the macro headwinds for 2022 appear to be diminishing. we inflation is falling fast to more acceptable levels and the US economy is grinding to a halt according to recent survey data and corporate income, Bond Market Assessment That the Fed won’t be able to tighten rates further in 2023 is looking like an increasingly accurate call.
This narrative has been a key driver of bitcoin’s 2023 rally so far, and many think the price could find further support in the coming months. While some continue to scoff at the latest move as just another bear market rally, the above indicators in Glassnode’s dashboard suggest that this latest move could be something more.
Additional signs of market recovery
Elsewhere, the widely followed Bitcoin Fear & Greed Index recently moved back into neutral territory (i.e. above 50) for the first time after a long period of fear and extreme panic. A sustainable recovery to neutral often comes at the start of the next bitcoin bull run, such as in early 2019 and again in mid-2020.
Meanwhile, analysis by crypto-focused Twitter account @CryptoHornHairs made a jaw-dropping observation that bitcoin is roughly following in the footsteps of a four-year market cycle that has been in play for more than the past eight years. The analysis suggests that bitcoin could rally for about 1,000 days after bottoming out last November, before entering its next bear market in 2025.
Additionally, a widely followed bitcoin pricing model is sending out a similar story. According to the bitcoin stock-to-flow pricing model, the bitcoin market cycle is roughly four years, with prices typically bottoming out somewhere between four-year intervals between “halvings” — bitcoin halvings occur every four years. The year is the event where the mining reward is halved, thus slowing the rate of bitcoin inflation. Past price history suggests that the next big rally for bitcoin will come after the next halving in 2024.
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