While Bitcoin (BTC) continues to hit new lifetime highs, the latest options market activity shows that traders are not chasing the uptrend with the same zeal as before.
On Monday, the price of BTC rose above $107,000, surpassing its previous high on December 5 and taking the cumulative increase since the US election to more than 50%, according to CoinDesk data.
The rally follows President-elect Donald Trump's pledge that the United States will build a Bitcoin strategic reserve similar to the Strategic Petroleum Reserve. Analysts expect the streak to continue next year, with prices in the $150,000 to $200,000 range by the end of next year.
However, the current pricing of options traded on Deribit shows that traders are not chasing the rally as they used to, pointing to a more cautious outlook in the short term.
At the time of writing, the 25 delta risk reversal for options expiring on Friday is negative, indicating the relative abundance of put options that provide protection against price declines. Puts expiring on Dec. 27 are trading at a slight premium to calls, but risk reversals extending to end-March expirations show call bias is less than 3 volatility points. .
This is in sharp contrast to the trend observed over the past few weeks, where traders aggressively chased new price peaks, pushing short-term and long-term call biases beyond 4-5 volatility points. In fact, short-term risk reversals frequently showed stronger calling bias than long-term risk reversals.
The latest block trades on Deribit tracked by Amber Data also show a bearish trend. The top trade so far today was a short position in a $108,000 strike call expiring on December 27th, followed by a long position in a $100,000 strike put expiring on December 27th and January 3rd. It is a position.
The cautious sentiment stems from concerns that the Federal Reserve on Wednesday may signal a widely expected 25 basis point rate cut, while also reducing or slowing the rate hikes in 2025. It might be something. Such an outcome could accelerate the hardening of bond yields, strengthen the dollar and undermine the case for investing in riskier assets. Perhaps sophisticated BTC traders are bracing for a correction.
