- Bitcoin’s 25 Delta Skew flipped sharply, signaling rising short-term hedging despite the asset trading near $110,000 highs.
- Short-term options show increased volatility while long-term expirations remain stable, indicating diverging sentiment among traders.
- Skew compression during 2024’s rally gave way to a recent surge, reflecting renewed caution and risk aversion in the derivatives market.
Bitcoin traders are increasingly pricing in downside risk, as options market data signals a renewed risk-off sentiment. According to Glassnode, the 25 Delta Skew for Bitcoin options has flipped sharply over the past week. The 1-week skew rose from -2.6% to +10.1%, while the 1-month skew climbed from -2.2% to +4.9%. These levels are near those seen before previous high-volatility phases, such as the notable “Liberation Day” rally. The shift Shows growing hedging activity and a cautious outlook despite Bitcoin’s high valuation near $110,000.
Source: Glassnode
Short-Term Options Reveal Market Jitters
The 25 Delta Skew tracks sentiment by comparing out-of-the-money calls and puts. A positive skew indicates traders favor downside protection. Historically, short-term skew readings have been more volatile than longer-dated expirations. During major drawdowns, like the 2021–2022 bear market, skew levels soared past 40%. These spikes coincided with Bitcoin’s crash from $70,000 to $15,000. Short-dated options, especially the 1-week and 1-month contracts, showed the most extreme reactions.
Moreover, with the recovery stage of 2023, skew also went through increased fluctuations while Bitcoin was rallying from $15,000 to $45,000. In essence, traders remained cautious in their adjustments as these periods of volatility arrived. Longer-dated options such as the 3-month and 6-month versions, however, remained pretty well defined.
Bull Market Compresses Skew Levels
The 2024 rally saw a compression in skew across all timeframes. Bitcoin surged past $100,000 and remained in a strong uptrend. Consequently, skew readings dropped as bullish conviction replaced prior anxiety. Besides, lower skew indicated reduced demand for protective puts as traders favored upside speculation.
The recent change in short-term skew, however, points to a return to caution. While lengthier expirations continue to be quiet, one-week futures are once again leading in volatility. This discrepancy suggests that long-term holders maintain their confidence while short-term traders respond to possible short-term threats.
