Key Points
- Bitcoin futures basis rise, indicating bullish market sentiment.
- Bitcoin options market shows increased call preference, further signaling bullish sentiment.
The bitcoin futures basis, or the gap between the futures and spot price, has seen a surge to levels unseen since the cryptocurrency's previous peak of over $68,000 in late 2021.
Deribit's Chief Commercial Officer, Luuk Strijers, commented that the basis is currently 18% to 25% annualized, percentages that were only observed in 2021.
Implications of the Basis Increase
Strijers explained that this high annualized basis enables derivatives traders to secure substantial returns. This can be achieved by purchasing spot Bitcoin and simultaneously selling equivalent futures contracts at a higher price. This strategy offers a dollar gain that can be realized at expiry, regardless of Bitcoin's fluctuating value.
He further noted that the difference between the spot price and futures price of Bitcoin reflects the growing market momentum. This momentum has been building since the approval of ETFs in January and the expectations surrounding the impact of the Bitcoin halving.
Strijers stated that the incredibly high yield is a bullish indicator and is driven by daily new money flowing into the system. This influx is due to the approval of the spot Bitcoin ETF and the expected impact of the Bitcoin halving.
Bitcoin Options Market Trends
In the Bitcoin options market, Strijers observed an increased number of outstanding calls compared to puts leading up to the end of March expiry.
The put-call ratio for Bitcoin is currently 0.59, indicating six puts for every ten calls. This ratio, which suggests a higher preference for calls over puts, can indicate that bullish sentiment still dominates among derivatives traders.
A put-call options ratio below one implies that the call volume surpasses the put volume. It's generally assumed that a trader who purchases call options is bullish on the market, while a put buyer is bearish.
Bitcoin's price has recently corrected from a new all-time high of above $73,000. This correction led to a substantial liquidation of long positions on centralized exchanges. The volatility resulted in the liquidation of more than $278 million in Bitcoin positions, with the majority ($225 million) being longs.
The largest digital asset by market cap is now being traded for $68,446. The GM 30 Index, which represents a selection of the top 30 cryptocurrencies, has decreased by 4.48% to 152.83 in the past 24 hours.
