Bitcoin Options Signal Possible BTC Bottom
Bitcoin has likely hit a bottom as bitcoin options skews climb back to zero showing a wider spread between puts and calls. This is good news for bitcoin investors, as it suggests that the market is stabilizing after the recent prolonged period of volatility.
Image courtesy: CoinDesk
The bitcoin options market is very similar to traditional options markets. A call is placed when a trader wants to have the option, but not the obligation, to buy BTC at a future date; a put is placed when a trader wants to have the option, but not the obligation, to sell BTC at a future date.
What is volatility skew?
The trending skew lines can vary wildly. Negative call-put trend lines imply that the market favors puts whereas positive trend lines imply the market favors calls. When calls and puts are near zero it generally means that demand from bulls and bears is relatively equal, signaling that across the market volatility has subsided.
The options market is often used by traders to predict future price movements, so the fact that it is starting to show more confidence in bitcoin is a positive sign.
Of course, this is just one market indicator and it is still possible that bitcoin prices could fall again. However, the overall trend seems to be toward stability, which is good news for those invested in bitcoin.
