Investors’ expectations for the future of the price of Bitcoin (Bitcoin-BTC) have changed to become positive in just a few days, and this is evident in the change in the prices of the options market. Thus, it has achieved an increase of 44% from its minimum levels earlier this month.
The annual gain is close to 70% as the price of Bitcoin soars in light of:
1. Increased demand for assets considered safe against the backdrop of problems in the global banking system.
2. Betting that the Federal Reserve will not continue to tighten further (the Fed’s policy meeting next week will be a key event as investors are divided on their belief that the Fed will decide on a final increase in interest rates of 25 basis points).
The reversal of the options market trend towards the upside
When the price of Bitcoin fell last week below $20,000 for the first time in two months, the price future expectations changed according to the delta deviation curve of 25% for Bitcoin options contracts that will expire within 7, 30, 60, 90 and 180 days, as the curve fell to its lowest value this year between -5 and -10; However, the recent sharp price recovery has lifted the 25% delta skew curves of the 7-, 30-, 60-, 90- and 180-day BTC options contracts back into positive territory as they all approach 5.
The curve of contracts that will expire within 7 days has reached its highest level since mid-February. The curves of contracts that will expire within 30, 60 and 90 days have also reached their highest levels since mid-January, while the curve of contracts that will expire within 180 days has reached its highest level since October. November 2021.
And the delta deviation curve is monitored by 25% for options contracts as an important broker to the extent that the trading desks exaggerate in raising or lowering prices to protect the upward or downward market movement through the buying and selling options contracts that they provide to investors; Put options give the investor the right – without the obligation – to sell an asset at a predetermined price, while call options give the investor the ability to buy – without the obligation – an asset at a predetermined price.
The value of the delta deviation curve of 25%, which is more than zero, suggests that the offices are asking for more prices for purchase contracts than the prices of their equivalent sales contracts, and this indicates that there is a greater demand for buying options compared to selling options, which is considered an indication of an upward movement, as investors are more eager to secure protection of (or to bet on) a price increase.
Thus, the Bitcoin options contracts markets send a signal indicating that investors are on a date with more profits, and this is logical in light of the recent market movement.
Where will the Bitcoin price go now?
With Bitcoin-BTC surpassing the resistance represented by the May 2022 lows in the $28,000 region, the path is now open towards the psychologically important $30,000 level close to the June 2022 highs around the $32,500 region; There is no real resistance on this road that can prevent this upward movement from occurring.
While the fundamental data seems supportive of this bullish movement for Bitcoin, and if we witness leniency at the next meeting of the Federal Reserve, the price of Bitcoin will receive support from financial flows stemming from risk-taking by investors and more prosperous financial conditions; In the event of continued tightening by the Federal Reserve – contrary to market hopes – we may witness a fluctuation in the price in the near term, but at the same time it will increase pressure on the US banking sector, which could increase the demand for Bitcoin as a safer alternative.
At the same time, the prevailing movements on the blockchain appear positive, as all the main metrics on the blockchain are heading in the right direction (the number of non-empty wallets, the number of daily trades, the number of active addresses per day, the rate of creation of new addresses), while giving alternative indicators – such as those monitored by the site Glassnode is on the list for “recovering from a bear market” – mostly signs of a bullish move as well.