• Bitcoin options market turns negative on short-term price outlook, but longer-term bullish bets remain.
• 25% delta skew of Bitcoin options expiring in seven days fell to around -2, its lowest level since mid-March.
• Investors remain confident in BTC’s longer-term outlook due to macro factors, on-chain trends and medium to long-term technical indicators.
Bitcoin Options Market Turns Negative
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. This 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 have risen.
Longer Term Outlook Remains Bullish
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. This confidence likely comes from macro factors such as the end of Fed tightening cycle and favorable changes to financial conditions as well as on chain trends and technical indicators pointing towards a bull run this year.
US Federal Reserve’s Tightening Cycle
The US Federal Reserve’s tightening cycle has been an important headwind for crypto markets throughout 2022 and it looks likely that this will be coming to an end soon with US inflation and economic growth decelerating significantly. This means that unfavorable changes to financial conditions are unlikely to return as a major headwind for crypto markets this year which is good news for Bitcoin prices going forward.
On Chain Trends & Technical Indicators
Recent technical developments including 1) Bitcoin’s spectacular bounce from its 200DMA and Reali have provided tailwinds for BTC prices which suggest further upward momentum going forward into 2021.. On chain trends also look positive with social volume increasing dramatically during April indicating strong investor interest which is likely driving higher prices for BTC currently and is expected continue doing so in 2021 if investor interest remains high . Finally medium to long term technical indicators such as the 21 Day Moving Average (which seemed earlier this week to provide resistance) and uptrends appear healthy making investors confident about future BTC prices looking up over time
In conclusion while significant uncertainty remains about how many more times the US Federal Reserve will lift interest rates investors still remain confident about Bitcoins longer term price outlook due macro factors such as end of fed tightening ,on chain trends consistent increases social volume ,and medium/long term technical indicators providing support . Short term bearsihness appears however with risk of extended correction rising and 7 day 25% delta skews approaching 0 .