Bitcoin Price Expectations Shift Bullish

Bitcoin (BTC) punters are looking at topside options bets in a bullish shift in price expectations after the Federal Reserve’s (Fed) meeting, while ether (ETH) continues to lag behind.

As of writing, BTC’s short-term and long-term risk reversals indicate positive implied volatility premium for bullish bets, reflecting investor interest in price gains for the leading cryptocurrency, according to Amberdata.

This marks a shift from the previously bearish sentiment that dominated before the Fed meeting, where short and near-dated puts were more expensive than calls, showing downside fears.

“Frontend skew flipped calls. Flows featured 21 Mar outright calls and calendars bought, while 28 Mar puts were sold,” noted Paradigm, an institution-focused over-the-counter tech platform. Large traders execute block trades via OTC platforms like Paradigm, which are then listed on Deribit.

Options are derivative contracts giving the purchaser the right, but not the obligation, to buy or sell the underlying asset at a predetermined price later. A call option grants the right to buy, while a put option grants the right to sell.

Bullish Shift Overview

The bullish shift in short and near-dated options coincided with the Fed’s decision to maintain its forecast for two rate cuts this year, despite anticipated stagflationary adjustments. Chairman Jerome Powell downplayed potential inflationary impacts from Trump’s tariffs, describing them as transitory.

Moreover, the resolution of the prolonged legal dispute between the SEC and Ripple (utilizing XRP for cross-border transactions) likely contributed to positive sentiment. XRP now stands as the world’s fourth-largest cryptocurrency, with a market cap of $142.21 billion.

Ether Puts Remain Pricer

Despite these positive developments, they have not yet translated into a favorable shift for ether options. At press time, ether risk reversals showed a preference for puts until the May expiry, maintaining the pre-Fed cautious sentiment, despite the upcoming Ethereum Pectra upgrade.

This technological update will introduce smart accounts to Ethereum, blob scaling, and validator UX enhancements, seen as a significant advancement by many. Ethereum developers launched the new test network, Hoodi, to facilitate the impending upgrade expected to take effect on March 26.

It’s important to note that the persistent bias for ether puts may partly stem from traders’ desire to hedge against downside risks in other altcoins, given that ether is viewed as the altcoin leader.