Bitcoin Options Market Most Bearish on Price as BTC Slumps to $20K

• Bitcoin prices have dropped below $21,000 and the 25% delta skew of options expiring in 7 days has reached its lowest level since late December 2022.
• Longer-term price views are holding firm for now as 25% delta skew of options expiring in 30-days, 60-days, 90 and 180-days remain close to zero.
• Implied Volatiltiy according to At-The-Money (ATM) options expiring in 7, 30, 90 and 180-days is broadly unchanged over the last month.

Bitcoin Price Slumps Towards $20K

Bitcoin’s latest slide below the $21,000 level on Thursday has caused traders to mull headwinds including a growing liquidity crisis amongst major crypto-friendly banks and ongoing macro headwinds as the US Federal Reserve signals risks. BTC/USD was last trading in the $20,700s, lower by over 5.0% in the last 24 hours according to CoinMarketCap and now down roughly 18% from earlier yearly highs in the low-$25,000s.

Options Market Turns Most Bearish on Short-Term BTC Outlook This Year

The 25% delta options skew of Bitcoin options expiring 7 days from now on Thursday fell to around -6, the lowest since late December 2022. A 25% delta options skew above 0 suggests that desks are charging more for equivalent call options versus puts which can be interpreted as a bullish sign as investors are more eager to secure protection against (or bet on) a rise in prices.

Longer Term Price View Holding Firm For Now

The 25% delta skew of options expiring in 30-days and 60-days also fell to their lowest levels of the year of around -3 and -2 respectively; however the 25% delta skew of options expiring in 90 and 180 days have been holding up with both remaining close to zero. This indicates that investors anticipate that current headwinds faced by the market will not send Bitcoin lower on a sustained basis from current levels.

Implied Volatility Unchanged Over Last Month

Options markets are also sending out messages that Bitcoin investors remain fairly sanguine on price volatility risks as implied volatiltiy according to At The Money (ATM) Options Expiring In 7 Days, 30 Days ,90 Days And 180 Days Is Broadly Unchanged Over The Course Of The Last Month. Deribit’s Bitcoin Volatility Index is also at 49 which implies that it expects no significant movements within this period either .