Bitcoin’s Put-Call Open Interest Ratio Surges to Six-Month High of 0.62

golden coin bitcoin against the background of a modern city

The bitcoin market is struggling negatively after the cryptocurrency lost nearly half of its value in two and half months.

Source: CoinDesk

BTC USD down -1.50%

The cryptocurrency’s put-call open interest rate expanded to a six-month high of 0.62 on Sunday. The ratio was 0.42 earlier in January.

Patrick Chu, director of institutional sales and trading at over-the-counter tech platform Paradigm, stated the put-call ratio signals demand for puts is currently high.

Chu further stated they have experienced a lot of risk reversal flow, where clients were purchasing puts and selling calls.

Traders implement a bearish risk reversal strategy by purchasing puts with lower strike prices and selling higher-strike calls when forecasting a potential price drop.

A put option gives the purchaser the right but not the requirement to sell the underlying asset at a set price on or before the specific date.

Traditional market participants use the ratio as a contrary indicator signaling a sudden increase in the metric taken to account for the extreme bearish sentiment.


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