Key Highlights:
- Short-term options reflect a cautious sentiment following Bitcoin's price spike above $107,000, which marks a major milestone after a significant rally.
- Recent data indicates a slight bearish lean in trading flows amid expectations of a hawkish Federal Reserve stance on interest rates.
Despite Bitcoin (BTC) achieving record highs recently, recent trends in the options market illustrate that traders are not pursuing these upward movements with previous enthusiasm. On Monday, BTC’s value exceeded $107,000, eclipsing the previous peak recorded on December 5, resulting in an approximate gain of over 50% since the U.S. elections.
This increase follows commitments from the U.S. administration regarding the establishment of a Bitcoin strategic reserve akin to its oil reserves, which has led analysts to project ongoing price increases, potentially reaching between $150,000 to $200,000 by the end of next year.
However, current options pricing patterns on Deribit signify that traders are adopting a more reserved approach. This change is evidenced by a negative 25-delta risk reversal, which implies a higher demand for put options designed to hedge against potential price declines. Meanwhile, put options expiring on December 27 are being traded at a slight premium compared to calls, indicating a cautious outlook as we transition into the new year.
The shifting sentiment appears influenced by concerns that the Federal Reserve may hint at a reduction in the pace of rate hikes for 2025 during its upcoming meeting, despite an anticipated rate cut of 25 basis points. Such developments could substantially grow bond yields, bolster the dollar, and deter investments in riskier assets like Bitcoin.
