Analysts suggest that Bitcoin derivatives traders are willing to pay a premium for short-term downside protection, despite a more optimistic view of the long-term options distribution.
CF Benchmark’s analysis of Chicago Mercantile Exchange (CME) options on Bitcoin futures shows that investors continue to pay high premiums for out-of-the-money (OTM) put options, indicating near-term bearish sentiment. This trend will continue even after the US Consumer Price Index (CPI) inflation report eases.
There is a slight bias toward call options, with analysts emphasizing a “flatter” volatility curve for longer-maturity options. This provides a more positive outlook for Bitcoin’s long-term prospects. They note that increased institutional participation may be contributing to this trend, as institutional investor sentiment tends to show less extreme swings.
Options, which give traders the right, but not the obligation, to buy or sell the underlying asset at a predetermined price, are closely monitored for indicators of market sentiment. Call options imply strength, while put options imply weakness.
In related news, the Financial Times reported that CME Group is considering launching Bitcoin spot trading alongside its existing futures product. This move will suit traders looking for a regulated platform to trade cryptocurrencies and provide profit opportunities through basis trading by leveraging the difference between futures and spot prices.
CME’s launch of Bitcoin spot trading is not yet confirmed, but highlights growing interest in regulated cryptocurrency trading platforms. CME Group, already a major player in Bitcoin futures trading, declined to comment on the possibility of expansion.
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