• The crypto market has seen a shift in sentiment from bearish to bullish as evidenced by positive risk reversals in Bitcoin (BTC) options trading.
• This shift is attributed to a combination of macro market and economy recovery, as well as miner/treasury hedging activity.
• According to an analysis by QCP Capital, the current state of the options market makes the crypto industry look like a major crisis, such as the shutdown of crypto exchange FTX, never happened.
The cryptocurrency market has seen a dramatic shift in sentiment from bearish to bullish over the past week. This is evidenced by the positive risk reversals in Bitcoin (BTC) options trading, where calls (buys) have been more expensive than puts (sells) across multiple tenors. This is unusual for the sector as BTC typically has a persistent put skew, mainly due to miner/treasury hedging activity. According to an analysis by QCP Capital, this shift in sentiment suggests that the current state of the options market makes the crypto industry look like a major crisis, such as the shutdown of crypto exchange FTX after filing for bankruptcy, never happened.
The market sentiment shift appears to be the result of a combination of both macro market and economy recovery, as well as miner/treasury hedging activity. Put skew drives the price of puts higher and calls lower and, under normal circumstances, puts trade with higher volatility than calls precisely because investors are hedging some of their bullish positions. The chart below depicts this market behavior and the bullish sentiment impacting the options sector.
The shift in sentiment is a positive development for the crypto industry and suggests that the sector is recovering from the previous bear market. The positive risk reversals in Bitcoin (BTC) options trading are a sign that investors are growing more confident in the long-term prospects of the crypto industry and that the market can handle any potential crisis. This is a promising sign for the industry as a whole, as it indicates that the sector is maturing and becoming more resilient to external shocks.
Overall, the shift in sentiment in the cryptocurrency market is a positive sign for the sector and suggests that the industry is becoming more resilient to external shocks. With the current state of the options market making the crypto industry look like a major crisis, such as the shutdown of crypto exchange FTX, never happened, investors can be confident that the sector is on the right track and that the long-term prospects of the industry remain promising.