Essential Insights:
Increased premiums for Bitcoin put options indicate a cautious sentiment among traders.
US job openings are nearing five-year lows, heightening concerns over recession and potential economic slowdown risks.
On Monday, $518 million was invested in Bitcoin ETFs, while public firms continue to stockpile, reducing available supply.
Despite Bitcoin (BTC) reaching $114,000 recently, professional traders are still wary of downside risks, with derivatives markets exhibiting heightened fear. Many traders are likely pondering whether these signals reflect general worries about global economic trends or issues unique to the cryptocurrency sector.
The Bitcoin skew metric peaked at 5% on Tuesday but returned to 8%, indicating a higher premium for put (sell) options. In neutral scenarios, BTC skew typically fluctuates between -6% and 6%. The failed bid to reclaim $115,000 frustrated traders, especially as gold maintained its upward trend, trading just 0.6% shy of Tuesday’s all-time high.
Gold has risen by 16.7% in the last two months, while the US Dollar Index (DXY) has consistently struggled to reach the 98.5 mark, reflecting diminished confidence in the fiscal situation of the US government. A weaker US dollar tends to hinder consumption due to more expensive imports and decreases tax revenues from the international earnings of US-listed companies.
Investor anxiety is mounting regarding the US economy as job market data continues to show weakness. The US Bureau of Labor Statistics reported 7.23 million job openings in August, nearing the lowest level in five years. “Federal unemployment insurance claims are about double what they were last year,” noted economists from the Economic Policy Institute on Tuesday.
Despite this uncertainty, the S&P 500 has demonstrated notable resilience as traders expect further interest rate cuts from the US Federal Reserve (Fed) and additional liquidity injections. The Fed’s total assets stabilized in September after 30 consecutive months of decline, signaling a potential reversal that might bolster risk-on markets.
The reduced strain in economic policies positively affects companies by lowering capital costs and diminishing returns on fixed-income products for investors. Unlike Bitcoin, listed companies can provide returns through dividends, stock buybacks, and mergers and acquisitions, hence are not solely reliant on employment levels or overall economic growth.
Stability in Bitcoin options put-to-call indicates no spike in bearish demand
Despite uncertainties, Bitcoin traders aren’t strictly bearish; whales and market makers are simply cautious about downside risks. Examining the put-to-call ratio helps ascertain whether there’s been an increase in demand for neutral-to-bearish strategies.
On Deribit, premiums for put (sell) options have lagged behind those for call (buy) options, signaling a greater demand for neutral-to-bullish strategies. The sudden increase on Saturday is not indicative, as the total premium paid that day was under $13 million. Overall, the data reveals no signs of stress or a significant rise in demand for bearish positions.
The $518 million in net inflows into Bitcoin spot exchange-traded funds (ETFs) on Monday clearly illustrates a demand for an independent hedge, not necessarily linked to gold. Public corporations like Strategy (MSTR), MARA Holdings (MARA), and Metaplanet (MTPLF) are consistently accumulating Bitcoin as a reserve strategy, possibly leading to a supply shock.
Ultimately, the reduced appetite for downside risk in Bitcoin options should be viewed as an indication of broader macroeconomic concerns rather than bearish expectations.
This article serves general informational purposes and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily reflect the views and opinions of Cointelegraph.
