Analysts: Investors are still willing to pay a premium for short-term downside protection

ChainCatcher news, CF Benchmark analysts indicate that despite Bitcoin breaking the $66,000 mark following yesterday's weak inflation data, investors are still willing to pay a premium for short-term downside protection. The implied volatility of out-of-the-money (OTM) put options remains higher compared to call options. Derivatives traders are willing to pay a higher premium for OTM put options, which is a sign of short-term bearish sentiment in the market. The increase in implied volatility (IV) of OTM put options suggests that traders are essentially hedging against a potential decline in Bitcoin's value.

Analysts point out that the volatility curve between long-term put options and call options is "relatively flat," while call options show a slight upward tilt. "This indicates that investors are more optimistic about Bitcoin's long-term prospects, and it will be interesting to see if the skew in call options increases if expectations of deflation begin to accelerate following a favorable consumer price index report."