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Another critical signal for the rising price of Bitcoin (BTC) has been lit. According to the world’s largest crypto options exchange Deribit’s data, the put-call ratio of current Bitcoin options indicates that the market sentiment for an upswing is high for the spring of 2024.
Investors Believe in the Continued Rise of Bitcoin’s Price
According to data from the crypto options exchange Deribit, the number of outstanding call options not yet paid is rapidly increasing compared to open positions in Bitcoin options. Luuk Strijers, Deribit’s Commercial Director, interpreted this situation by stating that investors predict the price of the largest cryptocurrency will rise in the early months of 2024.
Speaking to The Block, Strijers said, “The Bitcoin put-call ratio has varied between 0.4 and 0.5 this year. We have observed that this ratio has decreased for longer maturities, indicating that customers are using call options more frequently to take positions towards March and June 2024 maturities. This trend points to a longer-term bullish sentiment in the market, and the number of call options is increasing compared to put options.”
A put-call ratio below a certain level indicates that the volume of calls exceeds the volume of puts and signals an upward trend in the market. At the time this article was prepared, the put-call ratio at Deribit had dropped to 0.43. Furthermore, Deribit’s analysis coincides with GreeksLive’s options analysis. GreeksLive stated from its official X account that “When we look at the option data, we can see that the put-call ratio is low, which indicates that the main transactions this week were bullish.” GreeksLive added in its analysis that options investors are currently positioning themselves based on the expected price increase, focusing on spot Bitcoin ETFs anticipated to be approved in January.
Crypto Derivatives Activity is Increasing
On the other hand, Strijers mentioned that November was one of the most active months for Deribit. He also added that there has been an increase in activity across the crypto derivatives markets, saying “This increased activity is a reflection or cause of rising DVOL (implied volatility) levels and shows that volume and opportunities in this market are directed from here.”
Strijers expects an increase in open interest until the expiration date of end-of-month, quarterly, and annual options due on December 29th, stating “According to current statistics, $5.7 billion in Bitcoin options and $2.7 billion in Ethereum options are set to expire at the end of December.”
Options are derivative contracts that give an investor the right to buy or sell the underlying asset at a predetermined price on or before a specific date, without obligation. While a call option gives the right to buy, a put option gives the right to sell. An investor who purchases a call option is indirectly considered bullish on the market, while a put option buyer is deemed bearish.
