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In the wake of a recent bull run that saw crypto assets surpass $3 trillion in market capitalizations, traders have increasingly turned to options contracts for Bitcoin and Ethereum as a way to gain leverage.
The surge in activity is due to the fact that BTC and ETH are consolidating in a small trading range. Bitcoin was between $94,000-$95,000 in this period.
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Falling implied volatility levels (IVs) reflect tighter price movements. Bitcoin’s intra-week implied volatility dropped from 38% to 53% midweek.
Ethereum’s volatility metrics also reflected the trend. The 7-day IV and 30 day IV fell from 74% down to 61%, and respectively, 69% and 63%. Analysts describe this as creating a low-cost leverage environment, which encourages traders and investors to make use of the options pricing dynamic.
Options traders favor bullish exposure despite divergent sentiment
Dr. Sean Dawson heads the research department at Derive.xyz noted There is a bias towards bullish positions among traders of options on the platform. Dawson stated:
Calls account for 73% of the BTC premiums, and Ethereum is even more at 81.8 %.
Dawson stated that on Derive, the calls have a 4:1 ratio and the puts a 3:1 ratio. Dawson cautioned however that Derive may not accurately reflect the activity. sentiment across the broader market.
You can find out more about the options by clicking here. data Deribit, one of the largest crypto derivatives markets, showed a balanced position, while normalized delta skew suggested mixed sentiment.
Although Derive users seem to be positioning themselves for a price increase, other venues also reflect this. more hedged strategies. Dawson said, however, that in the event of no major events, BTC or ETH prices could stay near their current levels until the end of the month. Dawson wrote:
The outlook is stable for BTC in terms of predictions. However, there are increasing signs that a decline could be imminent. BTC is likely to reach $110K before May 30, but the chance that it will fall below $80K in this time period has dropped from 11%. For ETH it is 9% likely that the price will be above $2300 by 30 May. However, it has fallen from 24% in 24 hours to 21%.
Bitcoin Chain Data shows Strengthening Fundamentals
Investor confidence is increasing in parallel with the activity on derivative markets. CryptoQuant analyst Yonsei Dennt highlighted Bitcoin Market Value to Realizable Value (MVRV), ratio has seen a renewed surge.
The MVRV rose from 2.12 to close to its moving average for the 365 days, which is 2.15. Dent states that the current MVRV ratio is 2.12, which means holders currently have a gain that’s unrealized of about 112%. strong market positioning.
Dent explained that, if the MVRV 30-day average crosses the 365 day trend (also known as an a), then the MVRV is considered to be a positive indicator. “golden cross,” This could signal a resumption of bullish momentum.
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In previous cycles, such patterns preceded major rallies. Dent also stressed that it is important to continue to monitor the MVRV trajectory It is important to assess the trends’ sustainability.
Featured Image created using DALLE and Charts from TradingView
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Source: www.newsbtc.com
