- Leveraged positions taken by traders grew to new heights.
- Declining put to call ratio could make sentiment bearish against BTC.
Bitcoin [BTC] remained stagnant around the $42,000 mark for quite some time, leaving many holders and traders in suspense as to whether the prices will continue to grow or not.
High on leverage
Significant developments suggest that approximately $7.6 billion in notional value for Bitcoin options is set to expire.
Notional value refers to the total value of a position or contract, representing the nominal or face value without accounting for factors such as market conditions or fluctuations.
Simultaneously, there’s approximately $4 billion in leverage positioned above current price levels, extending up to $45,000.
These factors could create a scenario ripe for increased market volatility. Traders and investors are likely to closely observe these developments, as they have the potential to trigger substantial price movements in either direction.
The expiration of options may lead to heightened trading activity, with market sentiment swinging based on the outcome.
Additionally, the presence of considerable leverage could amplify the impact of market movements, contributing to a dynamic and potentially volatile environment for Bitcoin in the coming days.
Source: Coinglass
Coming to the put-to-call ratio for BTC, it was seen that it had declined massively over the last few months.
Bulls vs the bears
The put-to-call ratio is a financial metric that compares the number of put options (which give the holder the right to sell an asset at a specified price) to the number of call options (which give the holder the right to buy an asset at a specified price).
It is often used as an indicator of market sentiment.
If the put-to-call ratio declines, it means that there is a decrease in the number of put options relative to call options. This shift suggests a more bullish sentiment among options traders.
A lower put-to-call ratio indicates that investors are more optimistic about the future price of Bitcoin, as they are less inclined to purchase put options as insurance against potential price declines.
Traders and analysts often use changes in the put-to-call ratio as a contrarian indicator. A declining ratio may signal excessive bullishness in the market.
Read Bitcoin’s [BTC] Price Prediction 2023-24
This may potentially indicate an overextended or crowded long position. In such cases, some market participants might interpret it as a warning sign of a potential market correction, as overly optimistic sentiment may precede price reversals.
Source: The Block
At press time, BTC was trading at $42,544.09 and its price had fallen by 1.13% in the last 24 hours. The volume at which it was trading had also fallen during this period.
Source: Santiment
