and Solanas stand out as the major cryptocurrencies with a central sentiment gauge showing bullish momentum, while their peer bitcoin and ether remain stuck in the dark.
This key sentiment gauge, known as 25-delta risk reversal, is actually an options strategy that involves simultaneously buying a 25-delta call and selling a 25-delta put, or vice versa. The ’25 delta’ refers to options that are moderately out of the money, meaning their strike prices are off the current market price and therefore relatively cheap.
This strategy reveals market sentiment by comparing the implied volatilities of these bullish call options and put options, which offer downside protection. A positive risk reversal indicates that traders are paying a premium for calls over puts, signaling bullish expectations, while a negative reading reflects bearish bias. Deribit is the world’s largest crypto options exchange, accounting for over 80% of crypto options activity.
At the time of writing, XRP and SOL risk returns were positive across all available expirations – October 31, November 28, December 26 – on Deribit, indicating a call bias, according to data source Amberdata. A call buyer is implicitly bullish on the market, while a put buyer seeks to hedge his portfolio against or profit from an expected price decline.
The renewed bullishness follows a surge in demand for puts following the Oct. 10 crash, which saw XRP’s price tank as low as $1.77 from $2.80 on some exchanges. At the time of writing, XRP was changing hands at $2.33, according to CoinDesk data. SOL crashed to $188 from $220 the same day and has since been under pressure, as has XRP.
The constructive sentiment is in stark contrast to bitcoin’s risk reversals, which show trades at a premium to calls across all tenors, right up to expiration in September 2026. Clearly, BTC traders remain concerned about downside risks.
In ETH’s case, bearishness prevails until the December expiration options followed by bullish pricing in subsequent expiration options.
Risk reversals are widely tracked to gauge market sentiment; However, it is worth noting that while generally reliable, risk returns associated with XRP and SOL may be less accurate indicators due to the relatively smaller market size, volume and open interest compared to the billions seen in the bitcoin and ether options markets.
In addition to the persistent put bias in Bitcoin options, particularly in quarterly and longer expirations, this can be attributed in part to the widespread practice of call overwriting, where traders sell higher-strike call options against their long spot holdings to generate additional returns. In other words, put bias reflects return generation efforts rather than outright bearish market sentiment.
Perps flash neutral feeling
While XRP options have turned bullish, XRP perpetual futures are showing a more balanced market, consistent with the neutral funding rates and sentiments seen in BTC, SOL and ETH perpetual futures.
At press time, annual perpetual funding rates (charged every eight hours) were hovering near zero, indicating neutral sentiment, according to data source Velo. This muted demand for leveraged bullish exposure across these major cryptocurrencies is typical of traders struggling to regain confidence after a price crash.
The recent market crash liquidated $20 billion worth of leveraged futures bets, causing massive wealth destruction.
Perpetual futures are derivative contracts that allow traders to speculate on the price of an asset, such as cryptocurrencies, without an expiration date. These contracts use a funding rate mechanism, which is a periodic payment exchanged between traders with long and short positions to keep the futures price in line with the spot price of the underlying asset.
When funding rates are positive, this means that perpetual futures are trading at a premium to the spot price, signaling increased demand for leveraged bullish exposure. Negative prices suggest otherwise.
