• Bitcoin options have turned most bearish on the cryptocurrency’s near-term price outlook this year as prices slump towards $20,000.
• The 25% delta skew of Bitcoin options expiring 7 days from now dropped to around -6, the lowest since late December 2022.
• Meanwhile, implied volatility and Deribit’s Bitcoin Volatility Index (DVOL) remain broadly unchanged over recent weeks.
Bitcoin Options Market Bearish on Short-term BTC Outlook
Bitcoin options have turned their most pessimistic on the cryptocurrency’s near-term price outlook this year as prices slump towards $20,000. The 25% delta skew of Bitcoin options expiring 7 days from now fell to around -6, the lowest since late December 2022.
Implied Volatility and Deribit’s DVOL Holding Firm
Meanwhile, implied volatility according to At-The-Money (ATM) options expiring in 7, 30, 90 and 180-days are broadly unchanged over the course of the last month. Additionally, Deribit’s Bitcoin Volatility Index (DVOL) is also holding firm at 49.
Bearish Skew For Near Term Options
A 25% delta options skew above 0 suggests that desks are charging more for equivalent call options versus puts; implying there is higher demand for calls versus puts and a bullish sign as investors are more eager to secure protection against (or bet on) a rise in prices. However, for short term options expiring in 7 days and 30 days the skew is quite bearish with both dropping to their lowest levels of the year of around -6 and -3 respectively.
Longer Term Price View Holding Firm
The 25% delta skew of options expiring in 90 and 180-days have been holding up though; with both remaining close to zero which suggests that investors are taking the view that current headwinds faced by the market such as cryptobanks falling or US regulators upping scrutiny won’t send Bitcoin lower on a sustained basis from current levels.
Overall, Bitcoin option markets suggest that investors remain fairly sanguine on price volatility risks despite near term headwinds leading to a bearish sentiment for short term contracts while longer term contracts hold steady close to zero suggesting some optimism exists amongst traders looking beyond these temporary issues facing Bitcoin currently.