Bitcoin Derivatives Statistics Reflect the Neutral Sentiment of Traders, But Anything Can Happen

The last daily close of Bitcoin (BTC) above $45,000 was 66 days ago, but more importantly, the current level of $39,300 was first seen on January 7, 2021. The 13 months of boom and bust cycles culminated in a BTC price reaching $69,000 on November 10, 2021.

It all started when the VanEck spot Bitcoin exchange-traded fund was rejected by the United States Securities and Exchange Commission (SEC) on November 12, 2020. While the decision was largely expected, the regulator was tough and direct about the rationale for the decision. denial.

Strangely enough, almost a year later, on November 10, 2021, the cryptocurrency markets soared to an all-time high market cap of $3.11 trillion, just as US inflation, as measured by the CPI index, hit 6.2%. reached a peak in 30 years.

Inflation also negatively impacted risk markets, as the US Federal Reserve acknowledged on November 30, 2021 that inflation is more than just a “temporary” problem and hinted that winding down could happen sooner than expected.

More recently, on March 10, the US Senate approved a $1.5 trillion package, now awaiting President Joe Biden’s signature. The new money is the first budget increase since the departure of former President Donald Trump.


Evidence shows that professional traders are not willing to hold for long with leverage

To understand how professional traders are positioned, including whales and market makers, let’s take a look at Bitcoin futures and options market data. The base indicator measures the difference between longer-term forward contracts and current spot market levels.

The annual premium of Bitcoin futures should run between 5% and 12% to compensate traders for “locking in” the money for two to three months until the end of the contract. Levels below 5% are extremely bearish, while numbers above 12% indicate bullishness.

Bitcoin 3-month futures annualized premium. Source:

The chart above shows that this statistic plunged below 5% on Feb. 11 and has yet to show any signs of confidence from professional traders.

Still, it wouldn’t be wrong to judge that an eventual breach of the $44,500 resistance would catch investors off guard, triggering strong buying activity to cover short positions.

Options traders less concerned about further downside risk

Currently, Bitcoin looks quite undecided near $40,000 making it difficult to discern a direction in the market. The 25% delta skew is a telltale sign when arbitrage firms and market makers are overcharging for upside or downside protection.

If those traders fear a Bitcoin price crash, the skew indicator will rise above 10%. On the other hand, generalized arousal reflects a negative 10% skew. That is exactly why the statistic is known as the measure of fear and greed of professional traders.

Bitcoin 30-Day Options 25% Delta Skew: Source:

As shown above, from February 28 to March 8, the skew indicator ranged between 7% and 11%. While they didn’t exactly indicate fear, these wide-margin options traders overcharged for downside protection.

Related: Bitcoin Peaks Above $40K As Russia Sees ‘Positive Shifts’ In Ukraine War Dialogue

The last three days have shown a remarkable improvement and currently the 4% delta skew shows more of a balanced situation. From the perspective of the BTC options markets, there is a similar risk of unexpected upward and downward price swings.

The mixed data of Bitcoin derivatives presents an interesting opportunity for bulls. The cheap futures premium offers long leverage at a relatively low cost and downside protection is at its lowest level in 30 days.

The views and opinions expressed here are solely those of the writer and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risks. You should do your own research when making a decision.