The price of Bitcoin reached $107,000 in recent hours, marking a new all-time high (ATH). However, these developments don’t seem to excite BTC traders anymore. Because the options market shows that traders are not chasing ATHs. Here are the details
Bitcoin traders don’t follow the rise
As Bitcoin (BTC) continues to hit new lifetime highs, the latest options market trend shows that traders are not following the uptrend with the same fervor as before. According to market data, the price of BTC rose above $107,000, surpassing the previous peak on December 5 and bringing the cumulative post-US election gain to over 50%. The rally follows President-elect Donald Trump’s assurances that the US will build a strategic reserve of Bitcoin similar to the strategic reserve of oil. Analysts expect the winning streak to continue next year and prices to range between $150,000 and $200,000 by the end of next year.
However, the current pricing of options traded on Deribit suggests that traders are not chasing the rally like they used to, signaling a more cautious outlook in the short term. At the time of writing, the 25-delta risk return for options expiring on Friday was negative. This pointed to the relative abundance of put options, which provide protection against price declines. Put options expiring on December 27 are trading at a slight premium to calls. On the other hand, risk reversals dating back to the end of March showed a buying bias of less than three volatility points.
What does this data mean?
According to analyst Omkar Godbole, this is in stark contrast to the trend we have observed over the past few weeks, where traders have been aggressively chasing new price highs, pushing short-term and long-term call trends above four or five volatility points. In fact, short-term risk reversals have often exhibited a stronger call bias than their longer-term counterparts. The latest block trades on Deribit tracked by Amberdata are also bearish. The largest trade so far today was a short position in the $108,000 call expiring on December 27, followed by a long position in the $100,000 puts expiring on December 27 and January 3.
According to the analyst, the cautious mood may be due to concerns that the Fed on Wednesday will signal fewer or slower rate hikes for 2025 and deliver the widely expected 25 basis point rate cut. Such an outcome could accelerate the hardening of bond yields, strengthen the dollar and weaken the case for investing in riskier assets.
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