Bullish Sentiment Evident as Bitcoin Call Options Concentrate around $70k
Bitcoin Call Options Concentrated at $70,000 Strike Price, Indicating Growing Optimism
According to Jag Kooner, the Head of Derivatives at Bitfinex, there is a significant concentration of call options for Bitcoin set to expire at the end of March. These call options have a strike price of $70,000, suggesting a growing optimism regarding the value of Bitcoin.
Kooner points out that the put-call ratio, a key indicator of market sentiment, has consistently remained below 0.6 for the first time in six months. This indicates a bullish outlook among traders. The global put-call ratio for Bitcoin options currently stands at 0.6, according to The Block’s Data Dashboard. A ratio below 1 signals bullish sentiment as it shows a preference for calls, which are bets on the asset’s price increase.
On the other hand, a ratio above 1 would indicate bearish sentiment, highlighting a greater interest in puts, which are protective measures against a price decline.
Kooner also highlights the noticeable decrease in implied volatility in the options market. This decrease has reduced option premiums, making it more cost-effective for traders to enter positions. Deribit’s implied volatility index for Bitcoin fell from 77% to 72% over the past 24 hours. Lower volatility expectations suggest traders anticipate less price fluctuation shortly, affecting the pricing of options contracts.
Options are financial derivatives that allow traders the choice, but not the obligation, to buy or sell an underlying asset at a predetermined price before a specified date. Call options grant the right to buy, whereas put options offer the right to sell. Purchasing put options generally reflects a bearish market view, while purchasing call options indicates a bullish stance.
Overall, the concentration of call options for Bitcoin at the $70,000 strike price, along with the decrease in implied volatility, suggests a growing optimism and bullish sentiment among traders.
