Bitcoin price derivatives look a bit overheated, but data suggests bears are outnumbered
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Bitcoin (
Notice that the 25% delta skew has been neutral for the past two weeks, signaling equal pricing for bullish and bearish strategies. This reading is highly unusual considering Bitcoin gained 16.2% from Jan. 13 to Jan. 16 and typically, one would expect excessive bullishness causing the skew to move below negative 10.
One thing is for sure, the lack of bearish sentiment is present in futures and options markets. Still, there is some concerning data on excessive margin demand for leverage buying, although it is too soon to call it worrisome.
The longer Bitcoin remains above $24,000, the more comfortable those pro traders become with the current rally. Moreover, bears using futures markets had $235 million liquidated between Jan. 15 and Jan. 16, resulting in a decreasing appetite for bearish bets. Hence, the derivatives markets continue to favor bullish momentum.
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