The digital currency is setting new all-time highs.
Despite this, the market, in general, remains extremely greedy.
Bitcoin (BTC) surpassed $107,000, achieving a new all-time high that boosted the accumulated gain since the US elections to more than 50%.
US President-elect Donald Trump’s promise to create a strategic bitcoin reserve has supported the currency’s recent rally. Even so, options traders show cautious outlook on digital asset’s immediate future.
Data from the derivatives market reflects that operators are not looking for a significant rebound in the short term.
The current prices of options traded on Deribit show that investors They pay higher premiums for put options (put) than for purchase options (call), which indicates a preference for protecting against falls.
The 25 delta risk reversal for options expiring this Friday came back negative. This means that puts with delta 25, which rises 25 cents for every dollar the asset rises, are trading in higher demand.
A negative risk reversal reflects risk aversion, as investors anticipate a greater probability of declines before expiration.
Put options expiring on December 27 also saw a slight premium to call options. This data suggests that traders prefer to stay hedged in the short term.
Jeff Mei, director of operations of the BTSE exchange, indicated that bitcoin could reach $125,000 by the end of 2025, as reported by CriptoNoticias.
However, recent movements in the options market show that traders They do not pursue the rise with the same emphasis as on previous occasions. The cautious sentiment could be due to concerns that the Federal Reserve (Fed) will not raise interest rates as expected on Wednesday.
Greed reaches the extreme
For his part, the fear and greed index of the market is located at 87 points, which represents a state of extreme greed.
At times like this, investors tend to make impulsive purchases due to FOMO (fear of missing out). This may exaggerate bullish expectations. As enthusiasm dissipates, profit-taking often occurs, generating downward pressure on the price of bitcoin.
Although extreme greed often anticipates a correction, this is not an absolute rule. The market can remain in a state of greed for weeks, especially in bull run cycles.
The current behavior of the options market contrasts with bitcoin’s advance towards new highs. As traders look to protect themselves, prices continue to rise. The divergence between activity in the derivatives market and general sentiment reflects greater caution among institutional investors.
This bitcoin advance is related to expectations of institutional adoption and favorable political promises. The strategic reserve announced by Trump represents a potential catalyst for long-term adoption. However, in the short term, the options market suggests that traders prefer to reduce risks and lock in positions.
For now, bitcoin remains in the market’s attention. Despite cautious signs, The digital asset continues to set highs and generate expectations for 2025.
