Approximately $4.5 billion worth of options expired on Deribit
On Friday, around $4.5 billion worth of options expired on the Deribit derivatives exchange. This expiration is seen as a significant event in the crypto market.
Bullish indicator for Bitcoin
The bitcoin put-call options ratio on Deribit was observed to be bullish. The put-call ratio, which measures the volume of put options compared to call options, was below one, indicating a higher call volume and suggesting bullish sentiment in the market.
Elevated skew for call prices compared to puts
Deribit Chief Commercial Officer Luuk Strijers highlighted an important metric: the elevated skew for call prices compared to puts. This implies that calls are relatively more expensive due to increased demand, which is another bullish signal.
The basis is increasing
Strijers also noted that the basis, which measures the difference between futures and spot prices, is increasing. This suggests that traders anticipate higher settlement levels for upcoming expiries compared to spot prices today, further indicating a bullish outlook.
Understanding options in the crypto market
Options are derivative contracts that provide traders with the right but not the obligation to buy or sell an underlying asset at a predetermined price on or before a specific date. A call option grants the right to buy, while a put option grants the right to sell. Traders who purchase call options are typically considered bullish on the market, while put buyers are seen as bearish.
Hot Take: Bullish signals from options expiration
The recent expiration of $4.5 billion worth of options on Deribit has provided several bullish signals for Bitcoin. The put-call options ratio, which shows a higher call volume, indicates optimistic sentiment in the market. Additionally, the elevated skew for call prices compared to puts suggests increased demand and another bullish indicator. Moreover, the increasing basis between futures and spot prices implies traders’ expectations of higher settlement levels for upcoming expiries. Overall, these factors point towards positive market outlook and potential price increases for Bitcoin.
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