Data from Bitcoin options shows that crypto traders are currently selling out and uncertain about entering directional bets on the coin’s future transactions. This is the highest occurrence of this kind of investors’ sentiments on the coin since last year May, when more than 50% of Bitcoin’s value declined.
Arcane Research’s Report On Bitcoin
Arcane Research has published an analysis of the Bitcoin market. The research showed that Bitcoin experienced a low volatility rate of more than 70%. This supports the claim that options traders are now taking a bearish long-term view since May last year.
Bitcoin options allow traders to trade on the BTC price movements. As the currency appreciates, so does the option’s price. Consequently, the analyzed low volatility shows that investors aren’t ready to bet on the direction of the leading cryptocurrency. Also, this is the first time that the coin’s options have been this cheap since May 2021.
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In addition, Arcane Research stated that the coin’s volatility skew has peaked since last May. Volatility skew is the difference in market and call prices. The call option is generally more expensive than the pull option, creating a down option skew.
A recent drop in BTC’s price has seen it reach its highest point since the May 2021 crypto crash. The result is a bearish cryptocurrency market.
Bitcoin option investors have been the beariest in quite some time. Also, they’re hesitant about choosing a direction they feel that the BTC coin is moving in. This report also shows that traders are more inclined to buy cheap calls.
An Overview of Crypto Options
Options enable traders to place trades on an assets’ price directions. The traders must buy options if the price of the digital asset is predicted to close the transaction. Also, it’s worthy to note that volatile assets’ options have a greater demand, as they offer better possibilities for leveraging. High volatility crypto assets are therefore more expensive.
Despite Chaos, Bitcoin Price Faces a Turnaround
Regardless of traders’ lack of confidence and hesitations in betting on the directions of Bitcoin options, the coin seems to be gaining. The 4-hour chart shows that Bitcoin created an upward triangle and has shown a 15% rise from the previous upper boundary.
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For the world’s largest crypto asset to surmount its bullish milestone, it must surpass the upper boundary of the existing chart pattern, which is above $44k.
Featured Image from Pixabay. Chart by TradingView.com