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Wednesday, May 12, 2021

With The Bitcoin Price Dipping To About $32K, Most Traders Are Hedging Against Downside Risk

With the Bitcoin price falling on Thursday, most hedge fund traders seem less enthusiastic about the recent and future prospects of this cryptocurrency. The put-call skew of one-week, which is all about measuring the range between the price expenditures of calls and puts at a short-term level has all but risen to a 14% high over five weeks. According to reports, this skew had plummeted to -33% just a week back, so this increase seems to make traders less bullish regarding the Bitcoin price. 

The Bitcoin Price Has Led To Most Traders Taking Precautions

Analysts have mentioned that the skews of one, three, and six months have already started ascending from their recent lows- but they seem to still be in bullish territory fortunately. And this concurrent shift has been the direct result of the demand placed on downside hedges. Another reason noted has been the puts which have been placed with the bullish calls in sales of a significant amount. 

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Levitas, a platform for data analytics from Switzerland has mentioned that close to 380 contracts from the 29th January expiry calls of $30,000 seemed to have been purchased already. On the other hand, call selling has close to 50% of the volume of total trading. And this is expressly levied on major exchanges. 

Tuesday saw quite a lot of bids being drawn from puts or bearish bets. The options of Put have been placed at strikers of $32,000 and $36,000- which saw quite a high demand last Wednesday. According to reports, someone did buy around 600 contracts as of the expiry of 29th January. The data implies that several investors were already looking for a way out in the event of another fall in the bitcoin price

The Bitcoin price is currently being pulled down by press time– where it traded around 6.4% at a sum of $32,940. The price has fallen steadily to $32,000 which seems to be the lowest it has gone to since the 11th of January. 

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