Bitcoin ETF FOMO Settles Down, Here’s What Options Data Tells

The Bitcoin price has experienced a surge, surpassing $43,000 and registering a 2.2% gain in the past 24 hours. The market cap for Bitcoin is nearing the $850 billion mark. Notably, despite selling pressure in the BTC market, Bitcoin ETFs are still drawing significant attention and inflows. However, the initial FOMO (Fear of Missing Out) linked to the arrival of Bitcoin ETFs appears to be subsiding, given the relatively subdued performance of the BTC price.

Bitcoin ETF Crowd Sentiment Sees Major Shifts

In a recent analysis by on-chain data provider Santiment, historical patterns of crowd discussions surrounding Bitcoin have undergone a significant transformation, signaling shifting market sentiments.

Traditionally, a high ratio of crowd discussions focused on Bitcoin signals a fear indicator. However, Santiment notes that since mid-2023, the narrative has shifted. The enthusiasm and optimism surrounding Exchange-Traded Funds (ETFs) for Bitcoin have flipped the narrative, turning high Bitcoin discussions into a greed indicator. This shift is due to unrealistic expectations for market performance in the wake of ETF approvals.

Following the SEC’s approval of Bitcoin ETFs three weeks ago, Santiment observes a normalization of this indicator. However, the analysis points out a potential risk: if high discussions about altcoins outpace those about Bitcoin during the first week of February, it may push the Bitcoin discussion ratio into a bearish “unhealthy” zone.

Unlike previous Bitcoin social dominance spikes that heralded predictable market tops, a negative spike in this context could indicate that Bitcoin is once again being overlooked.

Santiment notes that despite recent declines, Bitcoin ETFs continue to attract substantial trading volume. $ARKB leads the pack in terms of volume, closely followed by $FBTC. Notably, the longstanding  Grayscale Bitcoin Trust GBTC has experienced a decline in volume while others have witnessed an increase.

Bitcoin Options Data

As per the Greeks.Live data, nearly 22,000 BTC options will expire today, February 2, accompanied by a Put Call Ratio of 0.66. The Maxpain point is identified at $42,000, with a substantial notional value of $960 million, adding significance to the impending options expiry.

The cryptocurrency market has demonstrated relative stability throughout the week, with both RV (Realized Volatility) and IV (Implied Volatility) experiencing downward trends for major terms. A notable development is the introduction of incremental capital into the crypto market through Bitcoin spot ETFs, signaling a shift as the grayscale sell-off slows down.

In terms of block trading, a more subdued activity is visible, characterized by certain whales reducing their positions. This reduction is primarily due to profit-taking strategies associated with betting on ETF movements. Looking ahead, market enthusiasts are anticipating the next significant development, with speculation surrounding the Bitcoin halving gaining traction.