Bullish Demand Strengthens in Bitcoin Options: Indicator Hits Yearly Low

Risk appetite in Bitcoin options turned bullish in a short time; while the 25-delta skew dropped to its lowest level of the year across all expiries, the one-week and one-month durations turned negative.

Glassnode reported in its recent update based on Binance data that the 25-delta skew indicator has retreated to its lowest level of the year across all examined expiry timeframes. This movement indicates that instead of hedging against a short-term decline, options investors prefer to pay premiums for upside call options.

25-delta skew is a metric that compares the relative price of bullish and bearish options with the same expiry. Positive values generally indicate that the demand for protection against a decline is stronger. The indicator turning negative points to bullish options being more in demand. The measurement does not track the Bitcoin price directly, but rather the demand balance in the options market. In the recent chart, the fact that one-week and one-month expiries specifically dropped below zero revealed that the shift is concentrated in the nearest maturities.

Short-term bullish expectations strengthened in Bitcoin options

The rapid occurrence of the change showed that near-term expectations in Bitcoin options reversed in a short time. The fact that the skew turned negative in the short-term section, referred to as the front-end, reveals that traders are paying more for a near-term rise instead of taking out insurance against a possible drop. Three-month and six-month expiries also retreated to their lowest levels of the year during the same period.

In the chart showing Binance data, the normalized skew movement in one-week, one-month, three-month, and six-month expiries is tracked along with the black Bitcoin price line. The latest movement indicates that short-term upside demand has strengthened compared to downside protection. This signal does not offer a direct price target for Bitcoin.