Bitcoin Option Markets Flip Bullish as BTC Rally Heats Up, Price Rises Above $28K

cryptonews.com:

In a matter of days, investors' view on the outlook for the Bitcoin price has flipped from being bearish to bullish, as represented by a shift in options market pricing. The flip in investor sentiment comes as the Bitcoin price surges above the $28,000 level for the first time since early last June, taking gains since earlier monthly lows to over 44%.

Yearly gains are now closer to 70%, with Bitcoin pumping amid 1) increased demand for assets deemed as a safe haven given troubles in the global banking system and 2) increased bets that US Federal Reserve won’t engage in much further tightening. Indeed, in the week ahead, the Fed’s policy meeting will be a key event, with investors split over whether the bank will deliver one final 25 bps rate hike.

When Bitcoin dipped under $20,000 for the first time in two months last week, the outlook for the BTC price according to the 25% delta skew of Bitcoin options expiring in 7, 30, 60, 90 and 180 days fell to their lowest levels of the year of between -5 to -10.

However, the aggressive price recovery has seen the 25% delta skew of Bitcoin options expiring in 7, 30, 60, 90 and 180 days recover rapidly into bullish territory, with all close to 5. For the 7-day 25% delta skew, that’s its highest level since mid-February. For the 30, 60 and 90-day skews, that’s their highest level since mid-January. Finally, for the 180-day skew, that is its highest level since November 2021.

The 25% delta options skew is a popularly monitored proxy for the degree to which trading desks are over or undercharging for upside or downside protection via the put and call options they are selling to investors. Put options give an investor the right but not the obligation to sell an asset at a predetermined