Options Traders Exhibit Caution Amidst bitcoin’s Bullish Performance
Over the past five days, bitcoin (btc) has experienced a remarkable surge of 23%, reaching an all-time high of $61,344. However, despite this bullish momentum, options traders maintain a cautious stance towards the market outlook and potential downside risks.
Wary Options Traders Amidst Bullish Momentum
The recent price increase has prompted some investors to take protective measures, as evidenced by the growing demand for downside protection options. The last significant 5% weekly loss for bitcoin occurred over five weeks ago, making it essential for traders to safeguard their investments against potential market corrections.
Strong Inflows into US bitcoin ETFs
The United States bitcoin Exchange Traded Funds (ETFs) have witnessed a substantial influx of funds, with over $673 million being invested on February 28 alone. Since their launch on January 11, these ETFs have accumulated net deposits worth $7.4 billion. However, despite this influx of capital, options traders remain skeptical regarding the sustainability of such growth.
Divergent Views on ETF Momentum
While some traders believe in a “snowball effect” where increasing bitcoin prices lead to further ETF sales, others remain cautious. Analysts argue that the potential for diminishing inflows exists, especially if the economy undergoes a severe recession or investors face increased financing costs elsewhere. Notably, economist David Rosenberg predicts an 85% likelihood of a U.S. economic recession in 2024, which could significantly impact the cryptocurrency market.
Analyzing the bitcoin Options Market
A closer examination of the bitcoin options market reveals a neutral sentiment, with the 25% delta skew fluctuating between -7% and +7% since February 20. This balanced pricing suggests a cautious approach among traders, particularly after bitcoin failed to breach the $52,500 mark. The anxiety among cryptocurrency investors during accumulation phases is evident from this data.
Traders’ Positioning in btc Futures Markets
Examining traders’ positioning in bitcoin futures markets provides additional insight. Top traders at exchanges like Binance and OKX have maintained a relatively neutral stance until recently, but as the price surpassed $53,000, there was a gradual increase in net long positions. Despite this, traders at OKX have not yet reached their highest monthly level in long-to-short ratios, suggesting ongoing skepticism.
