Bitcoin Put/Call ratio at 0.69: traders fear further decline

The data suggests traders are expecting further declines over the weekend. While Bitcoin’s price is still moving sideways, the same cannot be said for its open interest.

At the end of May, Bitcoin’s put-to-call ratio climbs to a level not seen since last April. At 100.80k puts and 145.37k calls, Bitcoin’s current P/C ratio is 0.69.

Bitcoin total open interest all expirations.
Image credit: laevitas.ch

Bitcoin’s Put/Call Ratio Paints a Bearish Picture

While not yet above 0.7, which would technically indicate bearish sentiment, the massive surge in puts is comparable to last year’s sell-out frenzy. What is clear is that open interest, like the total number of futures contracts, has reached a 12-month high.

Currently, investors who believe the price of Bitcoin will rise above the strike price, represented as call options, outnumber put options, which represent investors who believe the price of Bitcoin will fall below the strike price.

Either way, the high annual open interest volume at 240,000 suggests a trend reversal or another hard sell-off weekend. According to market sentiment indicators, a high P/C ratio in the current bear market means investors are hedging against a sell-off.

Similarly, the Crypto Fear and Greed Index is still in the extreme fear range, at 12 points, which is slightly higher than last May’s 10 points, following the sell-off after Elon Musk tweeted that Tesla ( NASDAQ 🙂 would no longer accept BTC payment because it’s not green enough.

Crypto Fear and Greed Index
Crypto Fear and Greed Index

The Crypto Fear & Greed Index indicates a deep bear market.
Image credit: alternative.me

Correlation of Bitcoin losses with stocks amid uncertain macro factors

In two weeks, on June 10, another CPI (Consumer Price Index) report is due out. of april decreased slightly to 8.3%, compared to the previous month at 8.5%. The market has widely viewed this as insufficient in the long run.

Indeed, it seems that the Federal Reserve should further accelerate its interest rate hike. This is indeed what happened with Wednesday’s FOMC meeting.

The Fed Minutes (Federal Open Market Committee meeting) showed agreement that the federal funds rate should be raised by 50 basis points (0.5%).

“Most participants felt that increases of 50 basis points in the target range would probably be appropriate at the next two meetings.”

Overall, the Open Market Desk survey put an 80% probability for a 50 basis point increase, which would lift the interest rate range to a high of 3.13%. This is much higher than previous surveys or the . In other words, the Fed would move from a more neutral stance to a restrictive stance on economic growth.

After all, with a higher cost of capital, growth assets tend to be hit the hardest. This has been amply demonstrated by Cathie Wood’s ARKK Fund, which has fallen more than -53.69% since the start of the year. In contrast, blue chip stocks, represented by the index, fell only -13.67% for the same period.

S&P 500 ETF Daily Chart

Growth asset (ARKK) reliant on cheap capital versus a safer stock haven (SPY).
Image Credit: Commercial View

However, over the past week both assets have rebounded, SPDR® S&P 500 (NYSE:) at +5.63% and ARK Innovation ETF (NYSE:) at +4.10%.

The same is not true for Bitcoin, which fell -5.77% for the week. Additionally, Bitcoin’s 30-day volatility, as a measure of its price fluctuation, increased to 4.22%, approaching last summer’s levels.

BTC/USD 30-day volatility chart
BTC/USD 30-day volatility chart

Image credit: buybitcoinworldwide.com

All things considered, with so much futures volume accumulating, we may be looking at another weekend of imploded betting.

Sallie R. Loera