Bullish Bitcoin Bets Remain Despite Short-Term Price Outlook: Market

• Bitcoin’s short-term price outlook has turned negative, according to options market data.
• Investors are buying bearish put options for short-term downside protection.
• The long-term bullish bets remain, driven by macro factors and technical developments.

Short-Term Price Outlook Turns Negative

Investors have turned their most bearish on Bitcoin’s short-term price outlook in more than one month, according to options market data presented by crypto data analytics website The Block. The 25% delta skew of Bitcoin options expiring in seven days fell to around -2 on Friday, its lowest level since the 14th of March. A 25% delta skew of below zero means that bearish Bitcoin put options expiring in seven days are trading at a premium versus equivalent bullish call options, suggesting investors disproportionately demand the former. With Bitcoin below some key short-term support levels, risks of an extended correction to support in the $26,500 and $25,200-400 zones have risen.

Longer-Term Bullish Bets Remain

Despite the 7-day 25% delta skew weakening to its lowest level in over a month, the 180-day 25% delta skew remains at fairly elevated levels of above 3. That means that bullish Bitcoin call options expiring in 180 days are trading at a premium versus equivalent bearish put options, suggesting investors disproportionately demand the former. And confidence in Bitcoin’s longer-term price outlook makes sense when you consider macro factors, on-chain trends and medium to long-term technical indicators.

Macro Factors Driving Longer Term Outlook

While significant uncertainty remains about how many more times the US Federal Reserve will lift interest rates and when it will start cutting them, one thing seems certain – the end of the Fed’s tightening cycle looks to be close as US inflation and economic growth decelerate. That implies that unfavorable changes to financial conditions are unlikely to return as a major headwind to crypto markets in 2023, as was the case in 2022.

Technical Developments Supporting Long Term Outlook

Meanwhile, Bitcoin is likely to continue to derive tailwinds from key recent technical developments including 1) Bitcoin’s spectacular bounce from its 200DMA and Real Strength Index (RSI) hitting lows not seen since late 2020/early 2021; 2) BTC closing out April with three consecutive higher monthly closes; 3) Open Interest hitting all time highs; 4) daily active addresses surpassing previous all time highs set during 2017/2018; 5) hash rate setting new all time highs; 6) miner balance hitting new local highs; 7) miner revenue reaching multi year highs 8 ) difficulty adjustment reaching record levels; 9 ) Constant curve supply expanding at slower rate than ever before due BTC block reward halving last May; 10 ) institutional inflows into Grayscale trust continuing unabated despite frothy prices 11 ) large players such as MicroStrategy further committing funds into BTC ; 12 ) corporate treasury adoption accelerating ; 13 ) positive sentiment amongst retail traders continuing despite choppy price action ; 14 ) Glassnode metrics indicating strong network fundamentals ; 15 ) increasing merchant acceptance across world 16 ) growing regulatory acceptance & clarity 17 ). Growing number of countries including Nigeria , Turkey & India exploring CBDC initiatives which could drive further adoption for cryptos .

As such , while investors have understandably become more cautious on BTC ‘ s near term prospects due current choppy price action , longer term bullish bets remain given supportive macro environment & underlying technical strength .

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