Bitcoin options trade shows more bets on retreat after failing to breach $100,000
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 26 (Reuters) -Investors in the world's largest cryptocurrency are anticipating a significant downward move after bitcoin failed to hit an all-time peak of $100,000, according to a crypto trading platform citing recent options activity.
Bitcoin hit a record high of $99,830 BTC= on Nov. 22, but it has since fallen more than 8% to a one-week low of 91,377.32 on Tuesday.
The best-known cryptocurrency has soared 120% so far this year and about 34% this month with the election of Donald Trump as U.S. president and a slew of pro-crypto lawmakers in Congress. Trump embraced digital assets during his campaign, promising to make the United States the "crypto capital of the planet," and accumulate a national stockpile of bitcoin.
Nick Forster, founder of onchain options decentralized protocol Derive with total trade volume of $7.1 billion, said in emailed comments on Tuesday that the so-called call-put skew index for the upcoming Dec. 27 bitcoin expiry showed a significant 30% drop in the last 24 hours, as market participants shifted toward more protective strategies.
The call-put skew, which reflects market sentiment, refers to the difference in implied volatility between calls (options to buy) and puts (options to sell). This skew still shows a preponderance of calls over puts, although it has since declined.
"It suggests traders are hedging against potential downside risks," Forster said, likely in response to BTC falling sharply. "However, pullbacks like these are not uncommon in bull markets."
Investors are looking to Dec. 27, when $11.8 billion in bitcoin options expire that could trigger major moves in either direction.
According to Foster, there is a 68% chance of bitcoin moving 16.03% lower to $81,493 or 19.9% higher to $115,579 by December 27. There is, however, a smaller probability of about 5% of bitcoin making bigger moves -- a 29.49% fall to $68,429 or a 41.83% surge to $137,645 by the same date.
Derive data also showed higher odds of 45% of bitcoin hitting $100,000, from last week's 34%, with a new 4% probability of surpassing $150,000.
Forster also noted stability in bitcoin's volatility in the last seven days, with the seven-day at the money implied volatility at 63% and the 30-day level at 55%.
"This close alignment suggests the market anticipates significant movements soon."
Bitcoin has come off its high perch for now, and one of reasons cited by market participants for the decline was good old profit-taking.
Anthony Pompliano, founder and chief executive officer at Professional Capital Management, in his letter to clients on Tuesday, cited _checkonchain.com analysis, which noted that long-term holders have distributed $60 billion worth of supply in the last 30-days.
Of long-term holders' supply moved since the bitcoin's bottom of $15,479 hit during the FTX collapse two years ago, 21% of it has happened in November, which is the "heaviest profit-taking we have seen so far this cycle," according to a post of _checkonchain.com on X.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Alden Bentley and Nick Zieminski
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
