Main Points:
Increased Bitcoin put option premiums indicate cautious sentiment among traders.
US job openings near five-year lows, raising concerns about recession and economic slowdown risks.
$518 million was invested in Bitcoin ETFs on Monday, while public companies keep accumulating, tightening supply.
Despite Bitcoin (BTC) pro traders’ recent gains to $114,000, unease remains regarding downside risks, as derivatives markets reveal heightened fear. Traders are likely evaluating whether these metrics denote widespread economic worries or fears specific to the cryptocurrency sector.
The Bitcoin skew metric hit 5% on Tuesday but reverted to 8%, indicating a higher premium for put (sell) options. In neutral conditions, BTC skew generally ranges between -6% and 6%. The unsuccessful attempt to regain $115,000 frustrated traders, especially while gold maintained bullish momentum, trading just 0.6% below Tuesday’s record high.
Gold has surged 16.7% in the past two months, while the US Dollar Index (DXY) has struggled to reach the 98.5 level, reflecting diminished confidence in the US government’s fiscal health. A weaker US dollar tends to hinder consumption since imports become pricier, and it also impacts tax revenues from international earnings of US-listed firms.
Investor concerns are rising regarding the risk to the US economy following persistent weaknesses in job market data. The US Bureau of Labor Statistics reported 7.23 million job openings in August, near the lowest level in five years. Economists at the Economic Policy Institute observed Tuesday that “Federal unemployment insurance claims are roughly twice as high as last year.”
The S&P 500 has displayed remarkable resilience amid this uncertainty, as traders anticipate further interest rate reductions from the US Federal Reserve (Fed) and more liquidity injections. Total assets on the Fed’s balance sheet stabilized in September after 30 months of declines, suggesting a potential reversal that could bolster risk-on markets.
Looser economic policies benefit companies in two ways: they lower the cost of capital and diminish investor returns on fixed-income assets. Unlike Bitcoin, listed firms can deliver returns through dividends, buybacks, and mergers and acquisitions, offering alternatives not solely reliant on employment figures or overall economic expansion.
Bitcoin options put-to-call remain stable, showing no surge in bearish demand
Bitcoin traders are not necessarily pessimistic, even though whales and market makers are hesitant to accept downside risks. Evaluating the put-to-call metric can provide insight into whether demand for neutral-to-bearish strategies is increasing.
Put (sell) options premiums have trailed behind call (buy) options on Deribit, suggesting that neutral-to-bullish strategies are currently preferred. The recent spike on Saturday does not reflect the overall trend, as the total premium that day was under $13 million. In general, the data do not indicate any stress or significant demand for bearish positions.
The $518 million in net inflows to Bitcoin spot exchange-traded funds (ETFs) on Monday clearly illustrates demand for an independent hedge, not necessarily tied to gold. Public companies like Strategy (MSTR), MARA Holdings (MARA), and Metaplanet (MTPLF) continue to stockpile Bitcoin as a strategic reserve, potentially creating a supply shock.
In conclusion, the reduced demand for downside risk exposure in Bitcoin options should be seen as a reflection of broader macroeconomic concerns instead of bearish expectations.
This article is for informational purposes only and should not be construed as legal or investment advice. The views expressed here are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.
