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• The put-call open interest fell down to 0.60, the lowest since January.
• Determining the market condition from the put-call open ratio interest alone may not be advised.
• Martin Cheung, said that when the market was bullish back in January, the buying calls crossed 50% above bitcoin going market price.
Bitcoin is currently trading at $33,312.76 and is down by 3.69% in the past 24 hours. Bitcoin’s market capitalization stands at $624.45 billion and daily trade volume is $30.42 billion. On June 22, BTC plummeted down to $29,458.35, the lowest it has been in the past three months. Bitcoin tried to hold its position above the $35000 mark but again on June 26 it fell down to $30,405. Bitcoin has lost almost 40% of its value ever since it reached its all time high of $63,000 in April. However, a recent metric suggests that the prevailing bearish market sentiment may start to fade away soon.
Demand for Call Option Increases
Bitcoin’s put-call open interest has plummeted down to six month lows. Put-call open interest is basically the ratio measuring the number of open positions, or open interest in put options interest in call options. As per the data by the data analytics platform Skew,, put-call open interest fell down to 0.60, the lowest since January. Luuk Strijers, chief commercial officer at Deribit said that the ratio has significantly slipped indicating the token’s increasing demand for call options. Strijers sees this as a positive signal which has the potential to suppress the ongoing bearish market. A call buyer is always bullish on the market whereas a put option enables buyers to sell, hence representing the bearish trend.
Ratio’s Steady Decline is an Indication That the Market has Calmed Down
The put-call open interest has been the highest in April and has been steadily slipping down since then. Previously, the ratio fell down to 0.45 in December 2020 which in fact was the lowest in six months. Ever since then the ratio has been oscillating in the 0.50 to 0.70 range, representing a bullish trend. Martin Cheung, an options trader from Pulsar Trading Capital said that when the market was bullish back in January, the buying calls crossed 50% above bitcoin going market price. Cheung adds that the ratio’s gradual decrease from April’s high is a sign that the market has calmed down.
However, determining the market condition from the put-call open ratio interest alone may not be advised. This is because the ratio doesn’t determine whether the number of positions open is inclined towards the bullish or bearish side. Strijers further explained and said that users shorting upside calls contribute to open interest and volumes for calls, which in fact is a bearish move. However according to Nick Mancini, research analyst at Trade the Chain, the overall dip in the ratio indicates a bullish market.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
