Bitcoin is one of the most important names in the crypto circuit.
The markets appear to have a reasonable bullish bias for this event, with a large number of traders going long on calls.
If you’re looking for signs of panic in the cryptocurrency market, look no further than Friday’s options data.
For one, the call/put ratio is near 1:1, which means that investors are betting both for and against bitcoin. Secondly, the call delta is positive (meaning that calls will benefit when BTC rises), while the put delta is negative (meaning puts will benefit when BTC drops). Thirdly and most importantly, the implied volatility of calls is higher than puts—that means traders are more optimistic about bitcoin’s price rising than they are worried it’ll fall.
Bitcoin Sees Brighter Days
The options market is a good predictor of the future price of bitcoin.
Options are a type of derivative that allows traders to speculate on the future price of an asset. They’re traded on exchanges, just like stocks and other securities, and can be used to hedge risk or make a profit. Options allow investors to buy or sell stock at a specific price by designating how many shares they want at what point in time in the future.
In this case, we see that most traders believe there will be no movement in the price for Friday’s event: very few call-options have been put on this event (only about $5 million worth), whereas there have been some huge buys ($200 million+) on put options at sub-$17k levels showing that investors are confident bitcoin will drop below $17k during Friday’s event (which it did).
This data shows that there is still some hope for a bullish market. The fact that so many traders are going long on calls and options shows that they believe prices will rise instead of fall. It may take time, but the bulls have a good chance at winning this event.