Bitcoin's Put-Call Options Ratio: A Bullish Signal for the Market


A Bullish Indicator Unveiled by Options Expiry

The recent expiry of bitcoin options on Friday, which coincided with the end of the week, month, and quarter, brought forth a bullish indicator for the market, according to an analyst. An estimated $4.5 billion worth of options expired on the Deribit derivatives exchange. Luuk Strijers, the Chief Commercial Officer at Deribit, observed that the bitcoin put-call options ratio was indeed a bullish signal for the digital asset.

Bullish Sentiment Evidenced

The put-call ratio reflected bullish sentiment, as the number of outstanding call options exceeded that of put options. When the put-call options ratio falls below one, it indicates that call volume surpasses put volume, thus indicating a bullish market sentiment. Additional data from The Block dashboard revealed that the put-call ratio on Deribit, as of today, stands at 0.49.

Signs of Increased Demand and Positivity

In addition to the put-call ratio, Strijers highlighted the significance of an elevated skew for call prices compared to put prices on the same Friday. The relatively higher costs for call options were a result of increased demand, reinforcing the bullish sentiment. Moreover, Strijers noted the basis, which indicates the difference between futures and spot prices, is on the rise. This upward trend suggests that traders anticipate upcoming expiries to settle at higher levels compared to the current spot prices, serving as another bullish signal.

Options and Market Sentiment

Options are financial derivative contracts that grant traders the right, but not the obligation, to buy or sell an underlying asset at a predetermined price within a specific time frame. In general, the purchase of call options signifies a trader's bullish outlook for the market, while put options represent bearish sentiment.

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