Bullish Sentiment in Bitcoin Options Trading on CME
Strongest Bullish Sentiment Since Trump’s Election Victory
On Tuesday, the Chicago Mercantile Exchange (CME) witnessed the strongest bullish sentiment in bitcoin (BTC) options trading since Donald Trump’s November 5th election victory. This development is reflected in the sharp increase in the number of traders buying calls, or options offering asymmetric upside exposure, leading to a 4.4% skew, the highest level seen since early November, as per data tracked by digital assets index provider CF Benchmarks.
Bullish Skew Reaches 4.4%, Highest Level Since Early November
The skew is the difference in implied volatility between calls and puts, or options offering downside protection. A positive value indicates a bullish sentiment, and the current reading of 4.4% suggests that traders are actively positioning themselves for upside exposure across both short- and long-term maturities.
Thomas Erdösi, Head of Product at CF Benchmarks, Comments on the Development
"Thirty-day topside skew in the bitcoin options market has reached levels not seen since the November election results. This reflects a strong bullish sentiment, with traders actively positioning for upside exposure across both short- and long-term maturities," said Thomas Erdösi, head of product at CF Benchmarks.
Bitcoin Price Rises as Support Level Defended
In response to the bullish sentiment, the price of bitcoin rose as much as 5%, briefly topping $106,000, as buyers defended the $100,000 support level despite President Trump failing to mention crypto or strategic bitcoin reserve in his inaugural speech the day before.
Renewed Interest in U.S.-listed Spot ETFs
The bounce was accompanied by renewed interest in U.S.-listed spot ETFs, which registered a cumulative net inflow of $802 million, according to data from SoSoValue. BlackRock’s IBIT drew $661.8 million alone, contributing to the bullish sentiment.
Institutional Investors Continue to Show Interest
"ETF inflows have continued their impressive accumulation streak, marking four consecutive days of significant inflows, amounting to over $3 billion for Bitcoin alone. Bitcoin ($802M) and Ethereum ($74M) are receiving robust institutional backing, which could propel digital assets to new highs," said Valentin Fournier, an analyst at BRN.
Long-Term Holders Scale Back Profit-Taking Activities
According to blockchain data tracking firm Glassnode, long-term holders – wallets with a history of holding coins for over 155 days – are scaling back their profit-taking activities. This could further fuel the bullish sentiment.
Looking Ahead
"Looking ahead, it’s possible that volatility levels might moderate slightly towards the end of the month, but we anticipate that the skew for topside will probably remain, barring any surprise policy developments. This will likely provide continued upward price pressure for the foreseeable future," said Erdösi.
Conclusion
The recent surge in bullish sentiment in bitcoin options trading on the CME is a clear indication of the market’s enthusiasm for the digital asset. As investors continue to show interest in the space, it is likely that the price of bitcoin will continue to rise, driven by the increasing demand for exposure to the asset. However, it is essential to keep in mind that the market is inherently volatile, and unexpected events could always impact the price.
FAQs
Q: What is the skew in the bitcoin options market?
A: The skew is the difference in implied volatility between calls and puts, or options offering downside protection. A positive value indicates a bullish sentiment.
Q: What is the current level of the skew?
A: The current level of the skew is 4.4%, the highest level seen since early November.
Q: What is driving the bullish sentiment?
A: The recent surge in bullish sentiment is driven by the increasing interest in bitcoin options trading on the CME, as well as the renewed interest in U.S.-listed spot ETFs.
Q: What is the current price of bitcoin?
A: The current price of bitcoin is around $106,000, having risen as much as 5% in recent days.
