Key observations:
The Bitcoin options delta skew exceeded the 7% neutral threshold, indicating cautious sentiment among traders prior to the US Fed decision.
The long-to-short ratio among top traders and $292 million in spot ETF inflows foster optimism, despite mixed signals from BTC derivatives.
On Wednesday, Bitcoin (BTC) neared $117,000 but could not sustain its bullish trend, as traders considered the likelihood that a Federal Reserve rate cut is already incorporated into market prices. Additional speculation surrounding potential restrictions on AI microchip sales to China also clouded market sentiment.
Are Bitcoin traders simply hedging before the US Federal Reserve’s decision, or are they making bearish bets aimed at $110,000 amidst growing uncertainty regarding AI demand after Nvidia (NVDA) shares declined by 2.6% on Wednesday?
The Bitcoin options delta skew climbed above the 7% neutral level on Wednesday, suggesting that put (sell) options are trading at a premium compared to call (buy) options. Although not drastic, this change is commonly observed in bearish market conditions, diverging from the neutral 5% level noted earlier in the week.
The Financial Times reported that China’s internet regulator is prohibiting companies from acquiring specific Nvidia microchips. Nvidia’s CEO Jensen Huang commented on this, expressing: “I’m disappointed with what I see, but they have larger agendas to work out, you know, between China and the United States, and I’m understanding of that, and we’re patient about it.”
Bitcoin traders prepare for Fed rate decision
To assess whether the heightened Bitcoin options skew corresponded with increased trading activity, one must closely analyze the premiums paid by market participants. Panic periods often see a spike in the put-to-call premium as traders urgently seek strategies to hedge their positions.
The BTC options put-to-call ratio currently stands at 71% at Deribit, indicating a low demand for neutral-to-bearish positioning among traders. Ratios above 180% signal extreme fear, previously seen on April 8 when Bitcoin dipped below $75,000 for the first time in five months.
These metrics counter the idea of a catastrophic scenario or excessive wariness amid uncertainties in the artificial intelligence sector and escalating global trade tensions. Overall, sentiment among Bitcoin traders appears more focused on the upcoming remarks from US Fed Chair Jerome Powell following the interest rate announcement, rather than exhibiting panic or overreaction in the market.
Related: Bitcoin whale awakens after 12 years, transfers 1,000 BTC before US Fed meeting
Top traders maintain bullish stance as spot ETF inflows bolster Bitcoin optimism
The long-to-short ratio among top traders on exchanges serves as a broader indicator of market sentiment, encompassing futures, margin, and spot markets.
On Wednesday, top traders’ long positions at Binance and OKX increased compared to the prior day, signaling continued optimism for Bitcoin despite conflicting signals from BTC options markets. In essence, whales and market makers anticipated price rises but were surprised when Bitcoin fell to $115,540.
The $292 million net inflow into Bitcoin spot exchange-traded funds (ETFs) on Tuesday likely bolstered trader confidence, reinforcing expectations for $120,000 and above. However, the ultimate outcome will hinge on the likelihood of a more accommodating US monetary policy and potential further resolution in the US-China tariff discussions.
This article is for informational purposes only and should not be interpreted as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily represent the views of Cointelegraph.
