Bitcoin (BTC) traders are turning their attention toward bullish options positions, signaling a positive shift in price expectations following the Federal Reserve’s (Fed) recent meeting, although ether (ETH) remains behind the curve in sentiment.
At the time of writing, both BTC’s short-term and long-term risk reversals, which indicate the implied volatility premium (demand) for call options compared to put options, were in the positive territory. This suggests that investors are keen on capitalizing on price increases in the leading cryptocurrency, according to data from Amberdata.
This marks a notable departure from the bearish sentiment that dominated leading up to the Fed meeting, where short and near-dated put options were more expensive than calls, reflecting concerns about downward price movements.
“The front-end skew has shifted towards calls, with notable flows including outright calls for 21 March and calendars being purchased, while put options for 28 March were sold,” noted Paradigm, a tech platform designed for institutional over-the-counter (OTC) trading, in their Telegram chat. Large traders and institutions engage in block trades via OTC platforms like Paradigm, which are subsequently listed on Deribit.
Options are derivative contracts that grant the buyer the right, but not the obligation, to buy or sell the underlying asset at a set price at a future date. A call option provides the right to purchase, while a put option gives the right to sell.
The recent bullish turn in short and near-dated options coincides with the Federal Reserve’s decision to maintain its forecast for two rate cuts this year, even as it implemented the anticipated stagflationary adjustment to its economic forecasts. The Fed announced plans to reduce the pace of its balance sheet runoff starting in April.
Notably, Chairman Jerome Powell mitigated concerns regarding the inflationary effects of tariffs introduced by Trump, characterizing them as transitory.
Moreover, the resolution of the lengthy legal battle between the SEC and Ripple, which utilizes XRP for cross-border transactions, appears to have positively influenced overall sentiment. XRP, boasting a market cap of $142.21 billion, ranks as the world’s fourth-largest cryptocurrency.
Ether puts remain pricier
However, these encouraging developments have not yet resulted in a positive transformation in the short and near-dated ether options market.
As of now, ether risk reversals indicate a preference for puts with expiration dates extending into May, maintaining the pre-Fed cautious sentiment despite the upcoming Ethereum Pectra upgrade.
This technological upgrade is set to introduce smart accounts to Ethereum, enhance blob scaling, and improve validator user experience, with many viewing it as a game changer. Ethereum developers launched a new test network called Hoodi this week to facilitate the upcoming upgrade, which is expected to go live on March 26.
It’s important to note that the persistent preference for ether puts may be partly motivated by traders seeking to hedge against potential downside risks in other altcoins, given that ether is widely recognized as the leader among altcoins.
