In the past week, few key events slipped under the radar. First, over 50 percent of Bitcoin Options expired on 27 March 2020 and second, the price did not move. With such a significant volume of options contracts expiring, two weeks after Bitcoin lost over a third of its value, something had to give.
Now, it looks like the bullish tendencies that were present prior to last Friday’s expiry have been replaced by high selling pressure once again. In fact, this selling pressure is the highest since before the March 12 drop.
According to data from skew markets, the Put/Call ratio on Bitcoin Options contracts has reached a value of 1.10, its highest since reaching 1.89 on March 13. A high Put/Call ratio suggests that options trades are either buying more puts, a right to sell contract, or buying fewer calls, a right to buy contract.
Bitcoin Options Put/Call ratio | Source: skew
In traditional financial products’ markets, a put-call ratio over the general range of 0.7 to 1 suggests high bearish pressure, as traders are more likely to sell, rather than buy. This selling pressure could be due to many reasons, chief among which is an expectation of a drop in price.
Seen in relation to previous Put/Call ratios, the prospects are bleak. Prior to the March 12 breakdown, the ratio surged as high as 1.39, its highest point in the past three months, and sure enough, selling pressure mounted a move down. Two days after reaching 1.39, Bitcoin on the spot market dropped from $7,800 to under $4,000, before a pullback to $5,500 helped the cryptocurrency salvage some pride.
However, since the aftermath of that bearish drop, the Put/Call ratio for Bitcoin has not moved over 1.08, seen immediately after the plummet. That is, until now, when the ratio is at 1.10.
Bitcoin Options Volume on Deribit and OKEx | Source: skew
In terms of the volume of contracts traded, there’s less fixed opinions. The most-traded contract is expiring on 24 April, with a strike price of $7,500, and is a put contract on Deribit. The second most-traded contract is expiring on 26 June with a strike price of $22,000, with a halving effect priced-in presumably.
Further down the order, according to volume contracts have a price in the range of $5,000 to $6,000 and an expiry between later this week and six months from now.
