SUMMARY
- JPMorgan’s retail sentiment score for BTC reached a record high last week.
- MSTR’s options market showed a strong bullish speculative trend, signaling potential price volatility.
Bitcoin (BTC) and other related cryptocurrencies have experienced significant gains since Donald Trump’s victory in the U.S. presidential election on Nov. 5. However, recent data tracked by JPMorgan and other analysts suggests that the market could have entered a frenzied phase, signaling potential further volatility. Bitcoin surpassed the $93,000-mark last week, spurring increased inflows into U.S.-listed spot ETFs and crypto stocks. JPMorgan’s retail sentiment score for BTC rose to an unprecedented high of 4, reflecting robust retail investor interest. This score gauges retail sentiment based on activity in BTC products, including spot ETFs.
In a client note, JPMorgan’s equity research team highlighted the surge in demand for bitcoin ETFs, with a z score of +3.4 signaling a significant positive deviation from the average. COIN also saw increased demand, with its sentiment score spiking to +6z, underscoring a strong retail order imbalance. Such elevated z scores indicate heightened enthusiasm and demand in the BTC space, reaching multi-sigma highs.
The options market of MicroStrategy (MSTR), a significant bitcoin holder, mirrored this increase in sentiment. The one-year 25-delta put-call skew sharply declined to -26.7% midweek, gauging the relative cost of puts versus calls. This change indicated optimistic speculation, as call options, used to profit from or hedge against upward price fluctuations, traded at a significantly larger premium than puts. Market Chameleon data, released by pseudonymous analyst Markets&Mayhem, showed a slight rebound to -11.8% by Friday, although the tilt against upside bets persisted.
There was a noticeable high skew in MSTR options, with calls consistently outpricing puts. The call skew was so strong, according to Markets&Mayhem, that it suggested a significant market decline was possible unless Bitcoin continued its parabolic rise. The present tilt, according to the MarketEar analytics tool, is “beyond extreme upside fear,” suggesting a potential correction.
Despite the bullish frenzy, analysts caution that sharp sentiment shifts could trigger significant price reversals. While BTC and related crypto assets are often seen as sound long-term investments, surging retail sentiment and speculative trading patterns introduce the risk of sudden, severe market pullbacks.