Bitcoin (BTC) has been locked in a tight trading range, fluctuating between $30,000 and $31,000. While some on-chain metrics show that this ongoing sideways movement has been observed before Bitcoin’s previous bull runs, there is little to indicate that a significant shift could happen soon.
The derivatives market, particularly the options market, reveals a divided sentiment about Bitcoin’s performance. This division is evident when analyzing Bitcoin options delta skew. The delta skew for options contracts expiring one week, one month, three months, and six months from now is 0.48%, -3.8%, -5.83%, and -8.62%, respectively.
Delta skew, also known as the “skew” or “risk reversal,” is a measure of market sentiment often used in the options market. It measures the difference in implied volatility between out-of-the-money (OTM) puts and OTM calls.
If the market is bullish, OTM call options (options to buy above the current price) will have higher implied volatility than OTM put options (options to sell below the current price) because traders are willing to pay more for the chance to buy the asset at a higher price in the future, expecting the price to rise. This situation results in a positive delta skew.
Conversely, if the market is bearish, OTM put options will have a higher implied volatility than OTM call options, resulting in a negative delta skew. In this case, traders are willing to pay more for the chance to sell the asset at a higher price in the future, as they expect the price to fall.
The 0.48% delta skew for Bitcoin options expiring in one week is slightly positive, indicating somewhat bullish to flat sentiment for BTC in the short term. However, the delta skew for options expiring in one month, three months, and six months is negative (-3.8%, -5.83%, and -8.62%, respectively), suggesting that the market sentiment becomes increasingly bearish over the longer term. Traders are willing to pay more for the chance to sell Bitcoin at a higher price in the future, expecting the price to fall.
This divided sentiment contrasts with the structure of the total open interest for Bitcoin call options, which stands at $9.7 billion. Open interest refers to the total number of outstanding options contracts that have not been settled. It is a critical metric that reflects money flow into the derivatives…
Click Here to Read the Full Original Article at Bitcoin (BTC) News | CryptoSlate…
