What do Bitcoin options tell us about investor sentiment?
There are $14 billion worth of Bitcoin options set to expire on Friday, split between Derebit and the Chicago Mercantile Exchange (CME). Options contracts give investors the choice to buy or sell an asset in the future at a predetermined price.
Investor sentiment on CME and Derebit
Calls (optimistic) make up 55% of the options expiring on CME, while puts (pessimistic) make up the remaining 45%. On Derebit, a leading crypto derivatives exchange, 60% of the options are calls and 40% are puts. This suggests that investors on Derebit are more confident in Bitcoin’s future price increase compared to those on CME.
High open interest and upcoming halving
The open interest in Bitcoin contracts has reached a staggering $21 billion, with $2.3 billion worth of options expiring at the end of January on Derebit and another $1.5 billion on CME. Additionally, there is already at least $5 billion worth of options set to expire in March, right before the anticipated Bitcoin halving in April.
Bitcoin price movement and SEC decision
Despite a slight dip today and a 2% loss over the past week, Bitcoin is still trading 11.4% higher than it was a month ago. Many investors and analysts anticipate that the Securities and Exchange Commission’s decision on pending spot Bitcoin ETF applications could cause significant price movement in the coming weeks.
Hot Take: What do Bitcoin options reveal about investor sentiment?
The expiration of $14 billion worth of Bitcoin options this Friday provides insights into investor sentiment. The split between calls and puts on CME and Derebit suggests that investors on the latter platform are more confident in Bitcoin’s price increase. With a staggering $21 billion open interest in Bitcoin contracts, there is considerable anticipation for the upcoming halving event in April. The SEC’s decision on spot Bitcoin ETF applications is also expected to impact Bitcoin’s price movement. Despite recent dips, Bitcoin remains significantly higher than a month ago, indicating sustained investor interest.
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