Key takeaways:
An extreme Bitcoin put-call options imbalance and a 19% delta skew reveal heavy hedging against downside price swings.Strategy’s cash hoard eases short-term debt fears but does not hold back a broader capital rotation into tech stocks.
Bitcoin has failed to reclaim the $61,000 mark since Thursday, despite optimism fueled by lower crude oil prices following the US and Iran’s 60-day ceasefire agreement. Demand for downside Bitcoin price protection jumped to unusually high levels, prompting traders to question whether $55,000 is the next target.
Deribit Bitcoin options premium put-to-call ratio. Source: Laevitas
The premium paid on Bitcoin put (sell) options on Deribit totaled $115 million on Friday, 7 times the $16 million paid on call (buy) options. The imbalance was the highest in over 12 months, signaling extremely low demand from bulls. However, such data does not necessarily signal conviction from bears.
Bitcoin 30-day options delta skew (put-call) at Deribit. Source: Laevitas
The Bitcoin options delta skew stood at 19% on Monday, meaning market makers are unwilling to hold downside price exposure. This setup hints at fear, although that has been the norm for the past 4 weeks. Data aligns with growing demand for bearish hedging as Bitcoin price struggles to sustain levels above $60,000.
Bitcoin’s weakness can be partially pinned to investors’ discomfort with MicroStrategy (MSTR US) ability to pay dividends and debt maturing in 2027. The company reacted on Monday by announcing an additional $1.2 billion in cash from recent share sales and setting aside $1.25 billion in Bitcoin for eventual sale.
The measures taken by Strategy ease some short-term concerns but also create anxiety about Bitcoin’s supply and demand dynamics. Even if no sales occur over the next couple of months, bears are more comfortable knowing that Strategy has no incentives to issue MSTR shares given the current 17 months of dividend coverage.
Related: Grayscale’s Pandl says Strategy should sell $3B Bitcoin to restore confidence
Rotation from Bitcoin and gold into semiconductor stocks
In contrast to Bitcoin investors’…
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