• Bitcoin options market sentiment has recently shifted to a more bearish outlook on the short-term price of BTC.
• However, investors remain confident in BTC’s longer-term outlook due to macroeconomic factors and technical developments.
• The 25% delta skew of Bitcoin options expiring in seven days has fallen to its lowest level since March 14th.
Short-Term Bearish Outlook
Investors have turned their most bearish on Bitcoin’s short-term price outlook in more than one month, according to options market data presented by crypto data analytics website The Block. The 25% delta skew of Bitcoin options expiring in seven days fell to around -2 on Friday, its lowest level since the 14th of March. A 25% delta skew of below zero means that bearish Bitcoin put options expiring in seven days are trading at a premium versus equivalent bullish call options, suggesting investors disproportionately demand the former. With Bitcoin below some key short-term support levels, risks of an extended correction to support in the $26,500 and $25,200-400 zones have risen.
Longer-Term Bullish Bets Remain
Despite the 7-day 25% delta skew weakening to its lowest level in over a month, the 180-day 25% delta skew remains at fairly elevated levels of above 3. That means that bullish Bitcoin call options expiring in 180 days are trading at a premium versus equivalent bearish put options, suggesting investors disproportionately demand the former.
Macro Factors Driving Optimism
While significant uncertainty remains about how many more times the US Federal Reserve will lift interest rates and when it will start cutting them, one thing seems certain – the end of the Fed’s tightening cycle looks to be close as US inflation and economic growth decelerate. That implies that unfavorable changes to financial conditions are unlikely to return as a major headwind to crypto markets in 2023, as was the case in 2022.
Technical Developments Boost Sentiment
Bitcoin is likely to continue to derive tailwinds from key recent technical developments including 1) Bitcoin’s spectacular bounce from its 200DMA and Real Strength Index (RSI) lows; 2) renewed upside momentum after breaking above $30K; 3) strong high volume buying pressure (as indicated by Chaikin Money Flow); 4) multiple rejections at this critical resistance zone throughout March; 5) positive divergence between BTC price & RSI/MACD indicators; 6) volume profile visible range breakout signal; 7) strong rejection at 200WMA signal for further upside move; 8) Symmetrical Triangle pattern breakout signal for further upside move; 9) buy signals from Ichimoku cloud indicator with bullish Golden Cross formation on daily charts etcetera .
In conclusion, while short term investor sentiment has become more bearish due recent market movements , there is still confidence within longer timeframes due macroeconomic factors and technical developments continuing boost investor optimism for bitcoin’s long term potential