Bitcoin Option Traders Seem Doubtful At Entering Directional Trades
17 February 2022 - 5:37PM
NEWSBTC
Data from Bitcoin options shows that crypto traders are currently
selling out and uncertain about entering directional bets on the
coin’s future transactions. This is the highest occurrence of this
kind of investors’ sentiments on the coin since last year May, when
more than 50% of Bitcoin’s value declined. Arcane Research’s Report
On Bitcoin Crypto market analysis company Arcane Research had
recently published a report on the performance of Bitcoin. Their
research highlighted that the coin experienced low volatility of
over 70%, bolstering that this is the first time options traders
have gone on a long-term bearish direction since last year May.
Meanwhile, Bitcoin options enable traders to trade on BTC price
movements; as the coin appreciates, the price of the options
increases. Consequently, the analyzed low volatility shows that
investors aren’t ready to bet on the direction of the leading
cryptocurrency. Also, this is the first time that the coin’s
options have been this cheap since May 2021. Related Reading
| Bitcoin Dominance Will Continue To Decline In Favor Of
Ethereum, Altcoins, FTX US President In addition, Arcane Research
stated that the coin’s volatility skew has peaked since last May.
The volatility skew evaluates the difference between market price
and call price. Generally, the call option has been more costly
than the pull options, creating a downward option skew. Moreover,
the recent depreciation in BTC price, the current BTC option skew,
has now surmounted to its highest since the overall crypto crash in
May 2021. This suggests more sellers than buyers in the coin,
resulting in a bearish market. Presently, Bitcoin option investors
are the most bearish in a long while. Also, they’re hesitant about
choosing a direction they feel that the BTC coin is moving in.
Furthermore, the report shows that this signals traders to purchase
cheap calls. A Brief On Crypto Options Options enable traders to
place trades on an assets’ price directions. For a transaction to
be completed, the traders buy the possibilities if the digital
asset reaches a predicted price. Also, it’s worthy to note that
volatile assets’ options have a greater demand, as they offer
better possibilities for leveraging. Consequently, crypto assets
with high volatility have more expensive options. Despite Chaos,
Bitcoin Price Faces a Turnaround Regardless of traders’ lack of
confidence and hesitations in betting on the directions of Bitcoin
options, the coin seems to be gaining. From the 4-hour chart,
Bitcoin has created an upward triangle pattern and shown a 15%
increase from its previous upper boundary. Related Reading
| TA: Bitcoin Fails to Test $45K, Why Dips Could Be Attractive
For the world’s largest crypto asset to surmount its bullish
milestone, it must surpass the upper boundary of the existing chart
pattern, which is above $44k. Featured image from Pixabay, chart
from TradingView.com
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