Bitcoin Options Pricing Reflects Reduced Bullish Bias Ahead of SEC ETF Deadline

According to CoinDesk, bitcoin options pricing indicates that traders are reducing their bullish bias as the U.S. Securities and Exchange Commission's (SEC) January 10 deadline to approve spot exchange-traded funds (ETFs) approaches. Options skew tracked by Amberdata shows calls expiring in one week, one, two, and three months trading at a premium of around 2% to puts, compared to 8% in early November. This steady retreat reflects a more measured bullish sentiment towards bitcoin. Traders may be in a wait-and-watch mode ahead of the anticipated ETF decision. Some analysts believe that the cryptocurrency, which has surged by 61% in three months due to ETF expectations, is likely to drop once the highly anticipated offerings go live. The weakening of call bias in longer-duration skews is also consistent with the out-of-consensus analysis that suggests billions of dollars in inflows into ETFs will likely occur over time rather than immediately. The one-week options at-the-money (ATM) implied volatility, which shows the market's expectations for price turbulence over the next seven days, has almost doubled to an annualized rate since December 29, surpassing longer-duration gauges. This serves as a warning for traders to stay alert leading up to and immediately after the January 10 deadline. Longer-duration implied volatility gauges have seen more minor upticks, indicating that traders expect ETF announcements to have a fleeting impact on the degree of price volatility. Furthermore, some analysts predict that ETFs will weigh on price turbulence in the long run.