Following the recent upward trend of bitcoin, the bitcoin options chart shows a strong sentiment from traders that bitcoin will sustain the current momentum. Bitcoin options contracts are used as a hedge for futures and spot trading for the token. Recent analysis shows an upward sentiment from traders who have put their faith in a continuous upward rally of bitcoin price.
Bitcoin currently trades at around $54,000 (at around 17:00 WAT on October 7, 2021) after breaking previous resistance levels through the $40,000 price level.
Current weekly and monthly charts show that Put options contracts are at the cheapest, lower than zero; an indication that sentiments for traders have more sentiments for pulling higher Call bets than Puts.
From September till date, the weekly and monthly charts showed a recovery above 10% in an uptrend that began in late August. Although news such as the Chinese ban on cryptocurrency and the instability in China’s real estate coupled with low-risk appetites in financial markets did lower the price of bitcoin, the asset has seen a steady rise in prices since September 29. Bitcoin option traders, in September, sought to navigate the bearish impact of those events on bitcoin price; on Derbit, Call contracts were fewer than Put contracts.
According to Luuk Strijers, the Chief Commercial Officer of Derbit, the largest cryptocurrency options platform, a move from a +10% to less than zero in Calls indicates that traders believe in a strong bullish momentum. In his words: “When the skew moves from over +10% in the past month to below zero, it indicates a more bullish overall sentiment,”. “Premiums (the price paid for options) for downward protection are getting cheaper.”
Bitcoin Options Trading
Traders can bet on the direction of bitcoin prices on bitcoin options markets. There are only two options; a Call and a Put. Call options are taken when traders believe that an upward movement is imminent within that time frame, and a Put option is taken when a downward market movement is predicted.
Call and Put options allow traders to buy and sell the asset at a set price before or during the expiration of the contract. The traders who purchase either of these contracts are not obligated to buy or sell the contract, however, and may choose to terminate them when they decide to.
Derbit recorded more long-term Call options from traders as long-dated Calls remained cheaper than short-term Calls made in September. With over 12,000 Call contracts placed for a long-term price to hit $100,000, traders have expressed a strong sentiment that bitcoin will continue the bullish movement. Call contracts showing a sentiment for the $80,000 price level have also increased on Derbit. Generally, all Call contracts since September have been placed higher than bitcoin’s current price which sits above $50,000.
As the crypto industry awaits the impact of the increasing crackdown and calls for crypto regulation across several countries, all types of traders will hope that the world’s first cryptocurrency will sustain the current momentum and hit new all-time high prices.
