The pricing dynamics of Bitcoin options reveal a reduction in bullish sentiment among traders as the U.S. Securities and Exchange Commission’s (SEC) January 10 deadline for spot exchange-traded funds (ETFs) approval approaches.
Analysis of Bitcoin options skew by Amberdata indicates a decrease in the premium of calls compared to puts. Calls expiring in one week, one, two, and three months are now trading at a 2% premium to puts, a significant reduction from the 8% premium observed in early November. This shift indicates a more measured and cautious bullish stance toward Bitcoin among traders.
Calls provide the option to buy the underlying asset at a predetermined price in the future, signaling a bullish sentiment, while puts represent a bearish outlook. The decreasing options skew reflects the anticipation and uncertainty surrounding the SEC’s decision on spot ETFs, with some analysts predicting a potential decline in Bitcoin prices following the ETF debut.
The weakening of the bullish bias in longer-duration options skew aligns with the unconventional analysis suggesting that significant ETF inflows may occur gradually rather than immediately impacting the market.
As the market approaches the SEC’s January 10 deadline, the one-week options at-the-money (ATM) implied volatility, indicating expected price turbulence in the next seven days, has nearly doubled since December 29, surpassing longer-duration volatility gauges. This increase serves as a warning to traders to remain vigilant during the period leading up to and immediately following the deadline.
While longer-duration implied volatility has experienced minor upticks, indicating expectations of a temporary impact from ETF announcements on price volatility, some analysts believe that ETFs could exert a lasting influence, potentially mitigating overall price turbulence in the long run.