The open interest in Bitcoin options reached a new all-time high of USD 2.9 billion, indicating that professional traders are still bullish on the BTC price.
Open interest in Bitcoin options contracts (BTC) reached a new all-time high of $2.9 billion. Interestingly, this feat occurred only five days after the October expiration, which settled $400 million in options.
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The Bitcoin options have a full open interest. Source: Skew
In the last six months, the option market has tripled, making investors more curious about the possible impact that upcoming expirations will have on the price of Bitcoin.
Monthly BTC transaction volume. Source: Digital Assets Data
Data from Cointelegraph and Digital Assets Data also shows that the monthly Bitcoin trading volume and the BTC futures volume has been increasing since the end of October.
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Volume of BTC futures by exchange. Source: Digital Assets Data
When analyzing the options, the slope of 25% of the delta is the most relevant indicator. This indicator compares similar call and put options side by side.
This indicator will become negative when the premium of put options is higher than that of similarly risky call options. A negative slope translates into a higher cost of protection downwards, indicating an upward trend.
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The opposite happens when market makers are bearish, which makes the 25% delta slope indicator enter the positive territory.
25% delta slope of 3-month BTC options.
Oscillations between -10% (slightly upward) and +10% (slightly downward) are considered normal. This hasn’t been the case since October 19, when Bitcoin surpassed the $11,600 level and never looked back.
This indicator is the most substantial evidence a trader interested in derivatives needs to recognize the current sentiment of Bitcoin options.
You should be aware of the call and put ratio for further confirmation
To further investigate how these instruments are being used in traders‘ strategies, one must be aware of the buy-sell relationship. Call options are generally used in neutral and bullish strategies, while put options are the opposite.
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By analyzing the proportion of open interest between put and call options, it is possible to estimate in general terms how bearish or bullish traders are.
The open interest on put options has delayed the most bullish call options by 30%. After the October expiration, this difference increased when the indicator reached its lowest level in 3 months.
Based on the current conditions shown by the tilt indicator and the proportion of call and put options, there is little reason to be concerned about the growing open interest in options.
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The market has been signaling bullish intentions, and the liquid derivatives markets are allowing the big players to hedge and enter the spot market.
From the perspective of BTC options, everything is clear for the current bull run to continue.
The views and opinions expressed here are those of the author alone and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.