Bitcoin options traders anticipate short-term price correction, analysts say
Bitcoin derivatives traders are still ready to pay a premium for short-term downside protection, analysts say.However, a longer-term outlook shows a more optimistic options distribution, skewed towards calls, the analysts added.
The CF Benchmark analysts said that although bitcoin saw a breakout above the $66,000 mark after yesterday's softer inflation print, there is still "higher implied volatility for OTM puts compared to calls."
They added that derivatives traders' willingness to pay elevated premiums for out-of-the-money (OTM) puts serves as a bearish short-term market indicator. The increased implied volatility (IV) for OTM puts indicates that traders are essentially hedging against the potential decline in bitcoin's value.
IV is a measure used in the options market that represents the market’s forecast of an asset or security’s likely movement or price fluctuations in the future.
Longer-dated options skew toward calls
In contrast to the short-term outlook, the analysts pointed to a "flatter" volatility curve between longer-dated puts and calls, with a slight skew towards calls. "This suggests investors are more optimistic about bitcoin's longer-term prospects, and it is worth watching to see if the skew to calls increases if expectations of disinflation start to accelerate after the favorable CPI report," the analysts said in an email sent to The Block.
The CF Benchmark analysis observed that the relative flatness of longer-dated puts and calls might also suggest increased institutional involvement "as these investors are less prone to extreme swings in sentiment."
Options are derivative contracts that give a trader the right but not the obligation to buy or sell the underlying asset at a predetermined price on or before a specific date. A call option gives the right to buy, and a put offers the right to sell. It is assumed that a trader who buys a call option is implicitly bearish on the market, while a put buyer is implicitly bearish.
CME Group plans to launch bitcoin spot trading
According to the Financial Times , the CME Group is considering launching bitcoin spot trading in addition to its existing futures products. The group has reportedly been discussing with traders who prefer dealing with cryptocurrencies on a regulated platform.
The FT report added that the launch of bitcoin spot trading on CME would allow traders to profit from so-called basis trades, where they would gain by exploiting the difference between futures prices and the underlying asset’s spot price.
CME Group owns the world’s largest futures exchange and already supports bitcoin futures trading. However, the FT report said the plan has not been finalized, and the CME Group declined to comment on the matter.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
ECB to launch tokenized euro for institutional markets in September
Since the Outbreak of the US-Iran War, Sovereign Debt Costs in Developed Countries Have Soared; G7 Has "Borne" $16 Billion
If high yields persist until the first quarter of 2027, this figure will expand to $34 billion. The energy supply crisis triggered by the closure of the Strait of Hormuz is one of the main drivers behind this round of rising yields. Combined with structural pressures such as increased defense spending, an aging population, and AI infrastructure, the upward trend in yields may become a long-term pattern.
For the first time in over a month! U.S. airstrikes Iran's Larak Island, oil prices surge in response
On August 30 local time, the U.S. military launched a new attack on Iran after more than a month, carrying out airstrikes on two Revolutionary Guard facilities on Larak Island. In retaliation, Iran fired missiles towards Jordan. Oil prices surged in response, with Brent crude temporarily exceeding $90 per barrel. Meanwhile, several senior U.S. military commanders warned internally that continued operations against Iran would be unsustainable, as only about a quarter of U.S. Navy destroyers are combat-ready. After six months of conflict between the U.S. and Iran, the situation has reached a stalemate, negotiations have broken down, and both sides are under pressure.
Crypto prices
More
