New data from cryptocurrency derivatives market Options activity indicating further price declines are expected for major digital assets such as Bitcoin (BTC) and Ethereum (ETH) suggests growing bearishness among traders.
A new report from crypto exchange Bybit, in collaboration with analytics and research platform Block Scholes, shows a significant increase in all levels of implied volatility. Different expiration dates Options for both Bitcoin and Ethereum.
This increase is particularly pronounced in short-term options, which reflect uncertainty in the near term.
“Implied skew – that is, the difference in implied volatility between out-of-the-money puts and calls – reflects the current market sentiment for BTC and ETH options,” ByBit Chief Technical Writer Nathan Thompson told Decrypt.For calls, higher implied volatility is a bullish indicator, while higher implied volatility is bearish.
“Now all the signals are generated from the options markets. They suggest that there are more negative aspects,” he added.
Derivatives markets are showing a clear direction towards an out-of-the-money option for both Bitcoin and Ethereum in the short term, the report said. This trend reinforces the short-term bearish outlook as spot prices struggle to recover from recent declines.
For Bitcoin options, put options now have a higher interest rate compared to calls, meaning traders are bracing themselves for lower moves. This comes with a reduction in overall open interest for the perpetual exchange following the recent sell-off.
The bearish sentiment is not limited to Bitcoin and Ethereum, according to the report. Solana (SOL) has been experiencing persistently negative funding rates for almost an eternity. last week.
Thompson said such rates are an indication that the bottom is beginning to form — and even if SOL does drop, it's unlikely to drop significantly from current levels. He He also cautioned against drawing broad conclusions about the overall Tier 1 and Tier 2 ecosystems.
“There are no significant inferences that can be drawn from SOL performance about L1 and L2 networks except that all crypto assets are highly correlated,” he said.
The report noted that after the August 30 options expiration date, open interest in call options fell sharply rather than keeping up. This, combined with the recent depreciation and lack of recovery in spot prices, has contributed to heightened uncertainty.
With the general trends seen in the data, Thompson said it's best for inexperienced traders to sit on their hands until the market adjusts which way it wants to move.
“Those feeling brave might want to set up calls expiring at the end of September, at which point the current Uncertainty should be reduced” he added.
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