Bitcoin Marks Swift Recovery From Recent Crash - But Why Are Traders Worried?

Bitcoin Marks Swift Recovery From Recent Crash - But Why Are Traders Worried?

2021-05-06 | Mike Hallen

Bitcoin Marks Swift Recovery From Recent Crash - But Why Are Traders Worried?

Bitcoin traders appear cautious about the sustainability of the crypto asset’s swift recovery after Tuesday’s low of $53k. The leading cryptocurrency jumped 8% earlier on Wednesday, erasing Tuesday's slide from $57k to $53k, as the United States Treasury Secretary Janet Yellen backtracked on comments suggesting the rate of interest hikes could also be required to prevent the economy from overheating. Bitcoin [BTC] is presently trading around $58k, representing a 21% gain on lows near $48k seen at the end of April, consistent with CoinMarketCap. The recovery, however, has did not subdue fears of a deeper market correction. The one-week put-call skew remains entrenched within the positive territory for the third straight week within a sign of persistent demand for short-term put options or bearish bets. Traders look to be buying "protective puts" – purchasing puts against long bitcoin positions within the spot or futures exchange. The put-call skew is a gauge of the worth of puts relative to calls; a positive skew implies that demand for puts [bearish options bets] is outstripping calls [bullish bets]. The one-week put-call skew is presently hovering near 9%, having turned positive with bitcoin's drop from $60k to sub-$50k within the last half of April. However, the choices market continues to point out long-term bull run with three- and six-month skews returning negative values. The one-month gauge is now hovering near zero.

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