Traders aren't panicking yet despite cooling crypto sentiment
Despite a recent cooling in cryptocurrency market sentiment, options market data suggests that traders are not yet panicking or bracing for a major crash. While demand for downside protection has increased, the cost of options remains relatively low compared to historical volatility.
Why it matters
Understanding market sentiment through options metrics helps investors gauge the level of fear or complacency within the crypto ecosystem.
Bitcoin BTC $83,080.76 , ether ETH $2,666.81 and other major cryptocurrencies have come under pressure since the uptrend hit a wall last Monday. The usual next question is whether this has traders scrambling to buy crash insurance.
That’s evident from skew, an options market metric that tracks the spread between what traders pay for downside puts and what they pay for upside calls. A sudden put bid would mean puts getting much more expensive than calls. That’s not the case so far. But yes, calls are no longer in demand as they were a week ago, a sign that bullish sentiment has cooled.
Data analytics firm Laeviats calls it skew reversion not a put bid.
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