Cryptocurrencies

Bitcoin Options Open Interest Nears All Time High – But Rise in Puts Could Presage Drop

Maria Prymachenko. Ukrainian bull. 1977
(Ввласенко/Wikimedia Commons)

While open positions in bitcoin (BTC) options have risen to near record-high levels, it’s not necessarily a good thing for those hoping for the rally in the cryptocurrency to continue.

  • The total number of outstanding BTC options contracts – or open interest (OI) – increased to $2.10 billion Thursday – just shy of the all-time high of $2.11 billion in late July, per data from Skew. 
  • On its own, high open interest can indicate existing trends are likely to be sustained – suggesting BTC’s recent rally from $10,650 could continue.
  • But the number of bearish puts relative to bullish calls has recovered from -10.3% to -3% in the past four days. As the graph below shows – traders are offloading much of their call options onto the market.
  • This suggests bullish speculation is beginning to ease – a sign of investors anticipating consolidation or price drop
  • Indeed, BTC has already pulled back more than 5% from the 13-month high above $12,400 it reached on Monday. 
  • Unless buying action comes quick, downwards momentum could push prices down to $11,000, QCP noted earlier this week.

See also: Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up, Options Data Suggests

Related Stories

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Cryptocurrencies Videos

CoinDesk

CoinDesk is the leading digital media, events and information services company for the crypto asset and blockchain technology community. Its mandate is to inform, educate and connect the global community as the authoritative daily news provider dedicated to chronicling the space. Founded in May 2013, CoinDesk reaches millions interested in blockchain technology thru its website, social media, newsletters, podcasts and video. CoinDesk created the original reference rate known as the Bitcoin Price Index which is widely sourced in the media including The Wall Street Journal, Financial Times, CNBC and many others on a daily basis.

Learn More