Analysts are drawing attention to a notable concentration of call options for Bitcoin, set to expire at the end of March, with a strike price of $70,000, indicating a bullish skew in market sentiment.
According to insights shared by Jag Kooner, Head of Derivatives at Bitfinex, the prevalence of call options at the $70,000 strike price signifies growing optimism about Bitcoin’s value among traders. Kooner highlights that the put-call ratio, a key metric reflecting market sentiment, has consistently remained below 0.6 for the first time in six months, indicating a bullish outlook.
The global put-call ratio for Bitcoin options currently stands at 0.6, according to data from The Block’s Data Dashboard. A ratio below 1 suggests bullish sentiment, as traders show a preference for call options, which bet on price increases.
Conversely, a ratio above 1 would signal bearish sentiment, indicating a greater interest in put options, which act as protection against price declines.
Kooner also notes a noticeable decrease in implied volatility in the options market. This decline has resulted in lower option premiums, making it more affordable for traders to enter positions.
For instance, Deribit’s implied volatility index for Bitcoin dropped from 77% to 72% over the past 24 hours. Reduced volatility expectations indicate that traders anticipate less price fluctuation in the near term, impacting the pricing of options contracts.
Options, as financial derivatives, provide traders with 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, reflecting a bullish market view, while put options offer the right to sell, indicating a bearish stance.
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