Bitcoin (BTC) traders are turning to topside options as expectations for price growth shift positively following the recent Federal Reserve meeting, though ether (ETH) still appears to be trailing behind the bullish sentiment.
At the time of writing, BTC’s short- and long-term risk reversals, which indicate the market’s implied volatility premium for buying calls versus puts, are in positive territory. This suggests that investors are eager to capitalize on potential price increases in the leading cryptocurrency, according to data from Amberdata.
This shift contrasts with the bearish mood that dominated in the weeks leading up to the Fed meeting, when short-term puts were more expensive than calls, indicating heightened downside concerns.
“Frontend skew flipped in favor of calls. Activity included purchases of outright calls for March 21 and calendar spreads, while selling occurred on puts due March 28,” noted the institutional-focused over-the-counter tech platform Paradigm in a Telegram chat. Institutions and large players typically engage in block trades on OTC platforms like Paradigm, which are subsequently listed on Deribit.
Options are a type of derivative contract that grant the buyer the right, but not the obligation, to buy or sell the underlying asset at a specified price on a future date. A call option allows for buying, while a put option allows for selling.
The positive turn in the short- and near-term options follows the Federal Reserve’s decision to maintain its forecast of two rate cuts for the year, even after adjusting economic predictions to account for stagflation. The Fed also indicated a slowdown in the pace of balance sheet reduction starting in April.
Crucially, Chairman Jerome Powell dismissed concerns regarding the inflationary effects of tariffs imposed during the Trump administration, labeling them as temporary.
Moreover, the conclusion of the lengthy legal battle between the SEC and Ripple—which utilizes XRP for international transactions—has likely boosted the market sentiment. XRP currently holds a market capitalization of $142.21 billion, making it the fourth-largest cryptocurrency worldwide.
Ether puts remain elevated
Despite these favorable developments, the bullish trend has not yet reflected in the short-term ether options, which continue to show a preference for puts leading up to their May expiry, maintaining a cautious sentiment that harkens back to the time before the Fed meeting.
At present, ether risk reversals suggest a bias towards puts, despite the upcoming Ethereum Pectra upgrade. This technological advancement is anticipated to introduce smart accounts, blob scaling, and user experience enhancements for validators, and is regarded as a potential game changer by many. Ethereum developers unveiled a new test network, Hoodi, this week in preparation for the upgrade slated for March 26.
The ongoing preference for ether puts may also be influenced by traders seeking to hedge against potential downturns in other altcoins, as ether is often viewed as a leader among them.
