Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs
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On Feb. 1 and Feb 2. Bitcoin’s (
Options traders flirt with an optimistic bias
Traders should also analyze options markets to understand whether the recent rally has caused investors to become more risk-averse. The 25% delta skew is a telling sign whenever arbitrage desks and market makers are overcharging for upside or downside protection.
The indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put options premium is higher than risk call options.
In short, the skew metric will move above 10% if traders fear a Bitcoin price crash. On the other hand, generalized excitement reflects a negative 10% skew.
The 25% delta skew has been relatively calm near negative 5, indicating similar odds for downside and upside from option traders. On the bright side, not even the $22,500 retest on Jan. 31 was enough to break the bulls’ spirit. Combined with the lack of demand from margin traders willing to short Bitcoin, the derivatives markets paint a bullish picture.
Even if it takes a little longer (perhaps a couple of days) to break above $24,000, there are no signs of stress coming from the Bitcoin margin and options markets. However, traditional markets continue to play a vital role in setting the trend, so Bitcoin investors should not become overconfident.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
