With the liquidation of Silvergate, the Bitcoin options market is biased towards puts | coindesk JAPAN | Coindesk Japan

Crypto-focused Silvergate Bank’s decision to scale back operations amid a deteriorating macro-economy raises fears among crypto-asset investors and provides protection against falling prices of key tokens Demand for derivatives to trade is soaring.

At the time of press release, it is derived by looking at the difference between the implied volatilities/demands of cheap out-of-the-money (OTM) calls and OTM puts that expire in four weeks. Bitcoin (BTC) 30-day call put skew has been heavily biased towards bearish put options for more than two months.

This indicates that investors are worried about further declines in the Bitcoin price and are buying put options to hedge their long spot and futures positions, or simply to profit from the price decline. It’s a sign.

Paradigm, an institutional liquidity network for crypto derivatives traders, said in a market update early March 9th that “Bitcoin’s 25th skew appears to be sucking up momentum from the market. It feels solid, so we’re back to short-dated puts.”

A call option gives the purchaser the right (but not the obligation) to purchase the underlying asset at a specified price on or before a specified date. A put option, on the other hand, gives you the right to sell. A long position is an investor owning the asset.

Given that the market depth of the USD trading pair has deteriorated as the Bitcoin price has fallen, it seems justified that put options are becoming skewed again. This means that a small sell order can lead to a large price drop. Depth refers to the ability of the market to absorb large buy and sell orders at stable prices.

“The depth of the US dollar market has fallen by almost as much as the depth of Binance USD (BUSD) over the past month. After the news about BUSD, the liquidity of its top pair fell by more than 40% before recovering. Meanwhile, the Silvergate news weighs heavily on the US dollar pair,” said Kaiko, a Paris-based crypto market analytics firm.tweeted.

Bitcoin fell to a three-week low below $21,000 in the last 24 hours, widening its decline from last month’s high of over $25,000.

The sell off was driven by the Silvergate crisis and associated liquidity concerns, the sharply hawkish Fed rate forecasts, and operational bottlenecks at major exchanges. is mentioned as a factor.

The put bias has reignited as bitcoin prices languish to three-week lows. (Amberdata)

The 30-day Bitcoin skew has fallen to -3.62, the lowest since January 7, a chart provided by Amberdata shows. The 60-day and 90-day indices fell to -2.72 and -1.58% respectively, the lowest level in two months.

A similar pattern can be seen in options related to Ethereum (ETH), the second-largest cryptocurrency by market cap, despite the imminent “Shanghai” upgrade of Ethereum.

“The paradigm flow is put-dominated for both BTC and ETH. BTC for 90 days, ETH for 180 days, puts > calls,” Paradigm said on its Telegram channel.

｜Translation: coindesk JAPAN
｜Editing: Toshihiko Inoue
| Image: Amberdata
｜ Original: Crypto Options Market Flashes Bitcoin Warning as Silvergate Winds Down Operations