Bitcoin Options Skew Signals Extreme Bullish Sentiment, Warns of Short-Term Correction Risk

Published: 2025-05-27 10:24:50 |

Matrixport analysis highlights a significant development in the Bitcoin options market: the options skew has recently dropped to around -10%, showing that traders are paying a steep premium for call options over puts. This reflects extreme bullish sentiment, with implied volatility for calls about 10% higher than for puts. Historically, when Bitcoin options skew becomes heavily negative, it often precedes short-term price corrections or periods of stagnation, as seen in previous local market tops. While strong institutional flows, such as BlackRock’s $20 billion Bitcoin ETF exposure, continue to underpin Bitcoin’s long-term bullish outlook, recent price weakness suggests vulnerability to profit-taking and potential market pullbacks. Key resistance levels are identified in the $103,000–$104,000 range. Traders should note that current market conditions favor cautious strategies: call options are expensive, puts are cost-effective for hedging, and outright bullish trades may carry increased risk. The extreme options skew acts as a contrarian signal, recommending risk management and the use of hedging strategies. For the best trading outcomes, traders should consider this options market indicator alongside technical, on-chain, and macroeconomic data.

Bearish

The extreme negative skew in Bitcoin options signals that traders are excessively optimistic, paying a substantial premium for call options. Historically, such one-sided bullish sentiment in the options market has often preceded short-term corrections or stagnant price periods for Bitcoin. Although long-term fundamentals, such as institutional adoption and ETF flows, remain robust, the overheated sentiment reflected by options pricing acts as a contrarian indicator. This suggests a heightened risk of an imminent price pullback or increased volatility, especially if profit-taking intensifies at key resistance levels. Short-term risk management and hedging are recommended until market sentiment normalizes.