- A certain degree of bullishness is registered in the options market
- Bitcoin price has been consolidating gains above $9,500, which suggests that the buyers are still in control
- A zone around $10,500 remains a key area of resistance
It appears that option market traders are unwinding wagers for an extended upward move in Bitcoin, a key metric suggests. The buyers have consolidated gains above 9,500 as they prepare for another attempt to clear 10,300.
Fundamental analysis: Bullishness in the options market
The crypto research company Skew reported that the put-call ratio, an indicator commonly used in the options market, plunged to 0.43 on June 4, hitting the lowest mark since the end of March. Skew’s data includes open interest at major future exchanges such as Deribit, OKEx, CME, Bakkt and LedgerX.
Over the last few weeks, the put-call ratio plummeted from 0.81 to 0.43.
“The put-call ratio can gauge the overall sentiment of traders and the lower ratio dictates that more traders are buying calls (bullish bets) than puts (bearish bets),” said Lennard Neo, chief of research at Stack, an investment management firm. “The decline toward 0.4 indicates that some form of bullishness is building,” Neo added.
Still, another possibility is that the plunge in the put-call ratio was caused by increased selling of calls. It is known that the open interest is related to the number of calls without disclosing whether buyers are purchasing or selling call/put options.
Investors typically purchase calls when they anticipate a bullish market and buy puts when they expect the market to drop. Also, proficient investors tend to sell calls if they believe the market will stay range-bound and not break through a particular level.
On the other hand, it is less likely that the drop in the ratio was caused by an increase in call purchases, due to the fact that calls are directing higher prices compared to puts.
“The put-call open interest ratio has proven its fortitude and has dictated the right direction over the past few major moves such as the Fed decline, and post-crash rally,” added Neo.
Thus, there is a high possibility that the options market is expecting another Bitcoin rise above $10,000.
Technical analysis: Bulls aiming higher
Bitcoin price has been trading sideways in the past few days. This should be seen as a positive development for the buyers, who have managed to keep the price action away from retreating lower.
Overall, the price action looks like it’s getting ready to move higher in the coming days. On the lower time frames, we see a series of the higher lows, which means that the buyers are still in control of the price action.
If there is another push higher, the likelihood of a break above $10,500 is high. In this case, the first target for the bulls is $10,950 as new investors will rush in to buy the world’s largest digital coin.
Bitcoin price is consolidating above $9,500 as the buyers take a breather before attempting to break $10,500 again. Bullishness in the options market suggests that we may see a bullish rally in the near future.