In a few days, investor opinion on the outlook for Bitcoin The price has flipped from bearish to bullish as represented by a change in options market pricing. Flip in investor sentiment comes as Bitcoin The price climbed above the $28,000 level for the first time since the beginning of last June, representing a gain of over 44% from the previous monthly low.
Annual profit is now close to 70% Bitcoin Pumping between 1) Given the increase in demand for assets considered as safe havens Crisis in the global banking system and 2) increased stakes that the US Federal Reserve will not engage in further tightening. In fact, in the coming weeks, Fed’s policy meeting will be importantInvestors are divided on whether the bank will eventually hike rates by 25 bps.
options market flip bullish
When Bitcoin Dropped below $20,000 for the first time in two months last week, according to 25% Delta Skew outlook for BTC price Bitcoin Options expiring in 7, 30, 60, 90 and 180 days fell between -5 and -10 to their lowest levels of the year.
However, the aggressive price recovery has seen the 25% delta skew of bitcoin options expiring in 7, 30, 60, 90 and 180 days move sharply into bullish territory, all near 5. For the 7-day 25% delta skew, this is its highest level since mid-February. For 30, 60, and 90-day volatility, this is their highest level since mid-January. Finally, for the 180-day disparity, it is at its highest level since November 2021.
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 there is strong demand for calls versus puts, 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 bitcoin options markets are thus sending a message that investors are positioning for further gains. And it makes sense in the context of recent moves.
Where next for BTC price?
With bitcoin now clearly clearing resistance in the $28,000 area as a late May 2022 low, the door is now open for a bullish test of the psychologically important $30,000 level and then the $32,500 area in June 2022. is at a higher level. In fact, there isn’t much in the way of any resistance to stop such a rally.
It looks like fundamentals will continue to support bitcoin to the upside. If this week’s Fed meeting is peaceful, related risk-on flows and easy financial conditions should support bitcoin price. If the Fed is not as accommodative as the market expects, this could lead to a short-term price volatility, but could result in further stress in the US bank sector, which has been seen as a safe-haven option. Could increase the demand for bitcoin.
All the while, the on-chain trends are looking positive. Core on-chain metrics such as the number of non-zero balance wallets, the number of daily transactions, the number of daily active addresses, and the rate of new address creation are all trending in the right direction. Alternative indicators such as those tracked in Glassnode’s “Recovering from Bitcoin Bears” dashboard are also flashing (mostly) a bullish signal.
