Sentiment in bitcoin The market has turned bullish and traders are betting on a rally above $80,000, with traders positioning for a rally above $80,000.
That’s the message from the decentralized exchange that offers on-chain trading of crypto futures and options.
“Current options pricing shows roughly a 35% chance of BTC breaking above $80,000 by the end of June,” Nick Forster, founder of on-chain options platform Derive.xyz, told CoinDesk in an email. “Combined with the bias recovery, this activity suggests that many traders expect Bitcoin to recover towards the $80,000 level between June and September.”
Options are derivative contracts that allow you to bet on BTC prices going up or down, but with a built-in safety net that guarantees you will lose only a small upfront fee, not your entire account, if the bet fails. It is similar to buying a lottery ticket.
A call option allows you to bet on price rises, while a put option allows you to bet on price falls. Therefore, the latter is considered a protective barrier.
Traders often follow options bias (that telltale price gap between calls and puts) to spot where the market is leaning. Call options that are more expensive than puts indicate a bullish bias, while put premiums suggest the opposite.
BTC bias recovers
Bitcoin’s seven-day and 30-day biases have returned to -6% from the panic lows of -25% in early February, when BTC sank towards $25,000.
The change indicates that traders are turning to protective puts again: less coverage against shocks, more nervousness.
“Despite earlier fears of a catastrophic fall in crypto markets, derivatives markets suggest those concerns may have been overblown. BTC bias – a key measure of sentiment in options markets – has rebounded sharply from around -25% (normalized by at-the-money implied volatility) to around +10% today, signaling a significant move away from aggressive short covering,” Forster said.
Biases based on the leading centralized options exchange, Deribit, paint a similar picture.
According to Forster, short selling (writing) has increased across the board in recent days, a sign that traders are willing to take on downside risk in exchange for a premium, which is consistent with expectations of price stabilization or rising.
At press time, bitcoin changed hands about $70,000, up nearly 5% on the month, according to data from CoinDesk.
