• Bitcoin options market turns negative on short-term BTC price outlook, but longer-term bullish bets remain.
• 25% delta skew of Bitcoin options expiring in seven days fell to around -2; bearish put options trading at a premium versus equivalent bullish call options.
• Despite this, 180-day 25% delta skew remains at fairly elevated levels, implying investors remain confident in BTC’s longer-term outlook.
Bitcoin Options Market Turns Negative on Short-Term Price Outlook
Investors have turned their most bearish on Bitcoin’s short-term price outlook in more than one month, according to options market data presented by crypto data analytics website The Block. The 25% delta skew of Bitcoin options expiring in seven days fell to around -2 on Friday, its lowest level since the 14th of March. A 25% delta skew of below zero means that bearish Bitcoin put options expiring in seven days are trading at a premium versus equivalent bullish call options, suggesting investors disproportionately demand the former. With Bitcoin below some key short-term support levels, risks of an extended correction to support in the $26,500 and $25,200–400 zones have risen.
Longer-Term Bullish Bets Remain
Despite the 7-day 25% delta skew weakening to its lowest level in over a month, the 180-day 25% delta skew remains at fairly elevated levels of above 3. That means that bullish Bitcoin call options expiring in 180 days are trading at a premium versus equivalent bearish put options, suggesting investors disproportionately demand the former. And confidence in Bitcoin’s longer-term price outlook makes sense when you consider macro factors, on-chain trends and medium to long term technical indicators.
Macro Factors Support Longer Term Outlook
While significant uncertainty remains about how many more times the US Federal Reserve will lift interest rates and when it will start cutting them, one thing seems certain – the end of the Fed’s tightening cycle looks to be close as US inflation and economic growth decelerate. That implies that unfavorable changes to financial conditions are unlikely to return as a major headwind to crypto markets in 2023 as was the case during 2022.
On Chain Trends & Technical Indicators
Bitcoin is likely to continue deriving tailwinds from key recent technical developments including 1) bitcoin’s spectacular bounce from its 200DMA and 2) real volume growth (transaction activity). Meanwhile BTC is staying above key resistance levels such as its 21 day moving average which provides support for further upswings going forward and helps maintain investor confidence despite current dips into lower prices ranges like those seen this week ($28K range).
Despite investor sentiment turning more bearish recently when it comes to near term outlooks for BTC’s price movements there is still strong confidence with regard to its long term prospects supported by macroeconomic factors such as Fed policy changes favoring cryptos plus positive technical developments like gains against important resistances being maintained or broken through while also seeing real transaction volume growth providing additional assurance of future success