Caught between Bitcoin buy/sell options? Let this be your guide

Bitcoin, the largest cryptocurrency has been in recovery mode for quite some time now. On CoinMarketCap, BTC briefly topped $25,000 on Aug. 14 before settling at the $24.9,000 mark at press time.

Obviously, the spot market had a raised sign. However, activity on BTC options suggested otherwise.

Are you In or Out?

Bitcoin open interest had been on a recovery trend since the December 4 crash. This was mostly the result of various recoveries that Bitcoin attempted to make. Alas, the recovery appears to have taken a major turn for the worse.

According to The Block’s data dashboard, Bitcoin options open interest (OI) has been plummeting for months, currently hovering around $5.5 billion.

Source: The Block

On November 10, 2021, the global open interest on Bitcoin futures stood at $26.73 billion, with BTC trading at $68,766. Since then, open interest on Bitcoin futures has fallen by more than 60% according to statistics recorded at the time of publication.

With the increase in liquidations lately and the drop in open interest, the datasets showed negative sentiment from traders as even open interest struggled to maintain a single trajectory, either up or on the decline.

Here is another catalyst who reiterated the same position. The put/call ratio for Bitcoin options hit yearly highs and stood at 2.32 on August 14.

Source: Cryptorank

Here, the put/call ratio measured the amount of put purchases compared to calls. Notably, a high put/call ratio indicated that investors were speculating that Bitcoin would continue to sell off.

It could also mean that investors are protecting their portfolios against a downward move.

More options?

Well, Bitcoin moving south cannot be ruled out on a macro framework.

That being said, BTC’s closest rival, Ethereum, has also enjoyed trading fame. Open interest in Ether options has reached a new all-time high.

According to The Block’s data dashboard, on August 12, open interest reached $8.11 billion. This figure was almost three times higher than a month ago.

Source: The Block

In fact, just two weeks ago, Ether overtook industry leader BTC in the options market for the very first time. Open interest for Ethereum options surpassed that of Bitcoin on August 1, as reported in the previous article.

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