Bitcoin options markets continue to send bullish signals – here are the implications for BTC price
bitcoin The options markets continue to indicate that investors expect a further rally in the price of Bitcoin. According to the graph on The Block, the following is widespread bitcoin The delta deviation of 25% has remained above zero since mid-January and recently hit its highest level since Q4 2021 at nearly 6.0.
Options delta skew of 25% is a broker that is commonly monitored for the degree to which the dealing desks end or charge lower fees in order to protect the upside or downside across the put and call options that they sell to investors. Put options give the investor the right but not the obligation to sell an asset at a predetermined price, while a call option gives the investor the right but not the obligation to buy an asset at a predetermined price.
An options delta deviation of 25% above 0 indicates that desks charge more for equivalent call options than for puts. This means that there is a higher demand for bids as opposed to selling, which can be interpreted as a bullish sign as investors are more eager to secure protection (or bet on) higher prices.
The open buy/sell ratio also indicates strong BTC sentiment
constant rise in bitcoin A delta option divergence of 25% is a sign that investor sentiment towards the world’s largest cryptocurrency by market capitalization took a major turn for the better in January. Another options market indicator called the open interest bid/buy ratio also indicates a rebound in sentiment.
According to the graph on the block, the ratio between the opening BTC Put and call options on the derivatives exchange were last at 0.46, close to the lowest since January 2022. It rose to 0.61 in the wake of the FTX cryptocurrency crash in early November.
Investors are betting that the bear market is over?
The bullish signs regarding the type of protection investors are calling for in the bitcoin options market add to a growing list of reasons why investors, analysts, and commentators alike are taking the view that the recent bounce in the bitcoin price may not just be a so-called “bear rally,” It has happened again and again in 2022, but it could be the beginning of a broader recovery in the market.
It has also been covered recently ArticleSix out of eight indicators that analysts at crypto-data analytics platform Glassnode monitor to determine when Bitcoin is moving out of a bear market are flashing bullish signals, and the seventh indicator is also likely to turn green soon.
Meanwhile, the overall headwinds in 2022 appear to be abating. we Inflation is falling rapidly to more acceptable levels and with the US economy stalling according to the latter survey data And corporate earnings, the Bond market valuation That the Fed won’t be able to tighten rates much in 2023 sounds like an increasingly accurate call.
This narrative has been a major driver of Bitcoin’s 2023 rally so far, and many believe it could support its price further in the coming months. While some continue to deride the recent move higher as just another bear market rally, the above indicators on the Glassnode dashboard suggest that this latest move higher could be something more.
Additional signs of market recovery
Elsewhere, the widely followed Bitcoin Fear & Greed Index has recently returned to neutral territory (i.e., above 50) for the first time after a prolonged period of intense fear and fear. A lasting recovery to neutral often comes at the start of the next Bitcoin bull market, such as in early 2019 and then again in mid-2020.
Meanwhile, analysis from crypto-focused Twitter account @CryptoHornHairs notes that Bitcoin is roughly following in the footsteps of the nearly four-year market cycle it has been following for over eight years. After bottoming out last November, bitcoin could rally for roughly another 1,000 days, the analysis suggests, before entering the next bear market in 2025.
Additionally, the widely followed Bitcoin pricing model tells a similar story. According to the Bitcoin Stock-to-Flow pricing model, the Bitcoin market cycle is roughly four years, with prices bottoming out somewhere near the middle of the four-year gap between “halvings” — the Bitcoin halving is a four-year phenomenon where the reward is reduced Mining Halving, Slowing Bitcoin’s Inflation Rate. The previous price history suggests that the next big rally for Bitcoin will come after the next halving in 2024.