While Ethereum Futures are making noise on the CME, Bitcoin[1] Options have been rather quiet. This is interesting, especially since Bitcoin[2] hit a new ATH after crossing $48,000 for the first time in its history, Elon Musk decided to watch what he says about Bitcoin, and Tesla bought $1.5 billion worth of Bitcoin. Additionally, Open Interest in Bitcoin[3] hit a new ATH too.
However, despite so much activity in Bitcoin, the Options market remains the quietest. Nobody wants to sell calls and nobody needs to buy puts.
Source: Ecoinometrics[4]
Based on the attached chart, the situation can be best described as being “hung.” Simply put, there is nothing going on in the Options market.
The activity is missing, even as the price rally continues. So, what does this inactivity mean? Does it signal an extended price rally or will it herald the anticipated price correction? Founder and CIO of Valishire Capital Management LLC Jeff Ross recently tweeted[5] about the current state of the Bitcoin price rally, stating,
“We are in the third and final Trimester of Bitcoin’s bull market, which officially began in mid-December 2018.
My 3rd Trimester playbook (not investment advice!):
Blow-off parabolic top to $400k-500k before Dec. 2021.
Followed by huge drawdown to $80k-100k in 2022.”
If Ross’s analysis is on point, the current state of quietude may take a downward turn, and the Options market may reflect the bearish sentiment of retail traders. The retail traders who are currently unwilling to sell calls and buy puts may be more than willing later, and some form of impact may be seen on the prices on spot and derivatives exchanges in the form of cascading and rapid corrections.
Institutional interest in Bitcoin has increased lately
