23. Oktober 2021

Key metrics of Bitcoin and Ethereum options show that traders are extremely bullish

The price of the Ethereum is now the focus of attention, but option data shows that professional traders are still extremely bullish about the price of Bitcoin.

In the last few days, the price of Bitcoin (BTC) has underperformed Ether (ETH) by almost 20%. Although BTC seems to be struggling to break through the $18,800 barrier, both cryptosystems show the same upward trend according to data from the derivatives markets.

Bitcoin’s performance is outperforming the 2016 halving that caused the all-time high of USD 20,000

Ether is entering a parabolic upswing as the launch of her Eth2 network approaches, and this optimism is reflected in the option markets. Despite the lack of similar price action from BTC, Bitcoin traders don’t seem to be worried and the data shows they’re still extremely bullish.
Ether and BTC futures contracts are still bullish

Analyzing the base indicator is a very useful thing, as it compares the level of futures contracts with the current price on spot (regular) exchanges.

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Healthy markets usually have an annualized basis of 5% to 10%, this situation is known as contango. On the other hand, discounted counter-futures trading usually occurs during strongly bearish markets.

The basis of Ether’s futures has ranged from 10% to 20%, therefore we can infer that there are bullish expectations. Instead of leaving his Ether holdings in a derivatives exchange, the seller preferred to use them to make a stake. Therefore, it is natural to demand a premium for the operation.

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The BTC futures premium has performed similarly, despite today’s negative performance. If traders had given up expectations of a continuous bull run, this indicator would have sunk below 10% annualized.

There is only one reason for a trader to pay such a costly premium on a futures contract, and that reason is the upside. This indicator can be interpreted as a tax on maintaining long leveraged positions.
Options traders are not interested in opening bearish positions

The 25% delta slope also provides useful information on the sentiment and posture of professional traders.

A delta inclination of +25% indicates that put options are more expensive than similar call options, indicating bearish sentiment. On the other hand, a -25% slope suggests an upward trend.

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The indicator usually ranges from -20% to + 20% in neutral markets, although this has not been the case for Ether in recent weeks.
Inclination of 25% of the delta of ETH’s 3-month futures contracts. Source: Skew

See how Ether’s futures base touched extreme levels of optimism on November 21st, which is very unusual.

This data suggests that option traders are not willing to sell upward protection. At -20%, the tilt indicator indicates that derivatives investors are still bullish despite the 28% rally over the last seven days.

We should expect BTC option traders to be a little less bullish after today’s negative performance, but this has not been the case.

The data shows that BTC option traders are remarkably optimistic, regardless of how difficult the last few days have been. Therefore, there are no signs of a change in sentiment coming from the derivatives markets.

Binance outperforms Huobi and OKEx, positioning itself as the largest derivatives exchange

Although there are many ways to read the same graph according to the technical analysis, BTC has not exactly transpired optimism.

Traders who prefer shorter time frames may have a bearish interpretation of the recent price action. Meanwhile, professional investors know how unpredictable the BTC markets are. Therefore, they are not willing to reduce their positive expectations on a whim.

Key metrics show that institutional demand for Bitcoin is growing rapidly

For now, there seems to be no reason to doubt Bitcoin’s upward momentum. Although Ether has outgrown it, traders are showing the same confidence for both cryptosystems.

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