BTC bearish bets seen as overheated, lower PCE could reverse sentiment

With bearish bets in the Bitcoin (BTC) options market becoming overheated, a lower-than-expected U.S. Core Personal Consumption Expenditures (PCE) price index for May could quickly reverse sentiment, CoinDesk reported. The one-week BTC options skew shows put option premiums are about 25 points higher than those for call options, indicating that investors are paying more to hedge against declines. A similar peak in put options occurred in early February, at which time BTC formed a short-term bottom just above $60,000. While the May Core PCE is forecast to rise 3.4% year-over-year, a lower actual figure would be seen as a sign of slowing inflation, weakening the case for further interest rate hikes, the analysis noted. In a related comment, former PIMCO CEO Mohamed El-Erian said the key is how well the upcoming data reflects the current inflation trend. He suggested that since the figures do not account for the recent drop in oil prices, future inflationary pressures are likely to ease.