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James Carter

February 22, 2023

Here’s What Investors Think About the BTC Price Outlook

Over the course of the last six days, Bitcoin has spent five of those days attempting to break and hold above the $25,000 barrier, but without success. The world’s largest cryptocurrency measured by market capitalization is currently forming an ascending triangle structure, which could lead to an explosion higher towards the next major resistance area, which is located somewhere around $28,000. There are some technicians who believe that this isn’t necessarily a negative thing.

Others, however, are concerned that the recent boom in the price of bitcoin, which has already witnessed a gain of about fifty percent, may be coming to an end. Price in Bitcoin futures markets is one approach to measure how investors feel about the prognosis for BTC, as well as how investors feel about the possibility of the volatility of Bitcoin. The following is a summary of what the options markets are now stating.

Investors Neutral on the BTC Price Outlook

According to the widely reported 25% delta skew of Bitcoin options with expiration dates of 7, 30, 60, 90, and 180 days, investors’ outlooks for the price of Bitcoin are currently fairly neutral. The data that was provided by the cryptocurrency analytics company The Block indicates that all five 25% delta skews are very close to zero. This represents a significant improvement from the lows that were reached immediately after the FTX collapse last year, but it is also a slight decrease from the highs that were printed earlier this year.

The options with a delta of 25% Skew is a popularly monitored proxy for the degree to which trading desks are overcharging or undercharging for upside or downside protection via the put and call options they are selling to investors. This can occur when trading desks sell options that have a higher strike price than the market value of the underlying asset. An investor has the right but not the responsibility to sell an asset at a predetermined price when they purchase a put option. On the other hand, an investor has the right but not the obligation to acquire an asset at a predetermined price when they purchase a call option.

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A 25% delta options skew that is above 0 indicates that desks are likely charging more for similar call options as opposed to puts. This indicates that there is a higher demand for calls as opposed to puts, which can be interpreted as a sign that investors are more eager to secure protection against (or bet on) a rise in prices. This is a bullish sign because investors are more eager to secure protection against (or bet on) a rise in prices.

But, a different gauge of investor sentiment relating to the options market is giving a sign that is more positive. The Open Interest Put/Call Ratio of Bitcoin options was last seen at 0.41, according to data that was supplied by The Block. This figure is still extremely near to the record lows that were recorded in late January and early February. When the Open Interest Put/Call Ratio falls below 1, it indicates that investors are more interested in buying call options (which are wagers on the price going up) than they are in purchasing put options (bets on the price dropping).

Investors Are Positioning For Uptick in Volatility

According to information provided by The Block, the 7-day Implied volatility of Bitcoin as measured by the At-The-Money (ATM) options market has just come dangerously close to reaching its highest level of the month. On Saturday, it increased to slightly under 60%, compared to preceding monthly lows of about 40%. This was a significant increase. Moreover, the 30-day ATM Implied Volatility was likewise at 60%, which was in line with its past monthly highs.

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The most recent rise in volatility expectations, as reported by ATM options markets, has roughly coincided with the recent recovery of the Bitcoin market from earlier monthly lows in the twenties thousand dollar range. It is important to note that implied volatility predictions for Bitcoin ATMs are still quite low when compared to historical data and are significantly lower than the highs seen in mid-January 2023 and November 2022.