Bitcoin options markets are indicating that investor sentiment has hit a new low for the year, as investors navigate a growing wall of concerns, including the prospect of a regulatory crackdown in the US and a potentially more aggressive US Federal Reserve monetary policy approach. facing. This is according to data provided by crypto analytics firm The Block, which widely showed a 25% delta skew. Bitcoin Options expiring in seven days hit their lowest levels of the year on Friday the 10thth February’s
Seven-day 25% delta skew reached -5.2 on Friday, lowest since 28th of December 2022. The 30, 60, 90, and 180-day 25% delta divergence were all at or near at least one-month lows, with all but the 180-day dipping below zero in recent days. This suggests that investors are bracing for further downside in the price of bitcoin in the near term.
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.
wall of rising anxiety
Bond market comes with a drop in sentiment of bitcoin Prices have declined more than 7% over the past seven days as investors took profits following a 2023 rally, rising concerns about US regulatory action and a more dovish Fed than previously thought. With respect to the former, Recent moves by the US Securities and Exchange Commission to crack down Fears are being fueled on US-based crypto-staking service providers amid further enforcement action from major cryptocurrency exchanges this year.
Meanwhile, much stronger US data than expected recently (as of last week jobs And ISM Services PMI Figures) has prompted market pricing to consolidate on a more hawkish Fed profile for this year, undermining expectations that the Fed may be nearing “the finish” in its fight against inflation. Next week’s US consumer price index inflation number will be a key input into the Fed tightening story, with any upside surprises likely to worsen BitcoinThe agony of
But Investors Are Still Positive on Bitcoin’s Long-Term Outlook
As mentioned above, the 180-day 25% delta skew remains above zero, indicating that the market’s long-term outlook on bitcoin remains moderately positive. Given the growing list of on-chain And technical indicators They are all shouting now that the 2022 bear market is likely to end, and the fact that, even if the Fed does hike a few additional interest rates, the end of tightening is still too early to expect a positive bias for the year. It is in sight, it continues to be understood.
But that doesn’t mean that every month is going to be the same as January. In crypto, it is rarely a straight line high.
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