And Solana’s It stands out as the leading cryptocurrency as major sentiment gauges are showing bullish momentum, while peer Bitcoin is ,ether You remain trapped in the dark.
This important sentiment gauge, known as 25 delta risk reversal, is actually an options strategy that simultaneously buys a 25 delta call and sells a 25 delta put, or vice versa. “25 delta” refers to a moderately out-of-the-money option. This means that the strike price is far from the current market price and therefore relatively cheap.
This strategy reveals market sentiment by comparing the implied volatility of these bullish call option calls and put options that provide downside protection. A positive risk reversal indicates that traders are paying a premium for calls over puts, indicating bullish expectations, while negative values reflect a bearish bias. Deribit is the world’s largest crypto options exchange, accounting for over 80% of crypto options trades.
At the time of writing, risk reversal for XRP and SOL is positive across all available expirations (October 31st, November 28th, December 26th) on Deribit, indicating a call bias, according to data source Amber Data. Buyers of calls are implicitly bullish on the market, while buyers of puts are looking to hedge their portfolio against expected price declines or profit from expected price declines.
The new bullish stance comes after a surge in put demand following the October 10 crash, when XRP’s price fell from $2.80 to $1.77 on some exchanges. At the time of writing, XRP opened at $2.33, according to CoinDesk data. SOL crashed from $220 to $188 on the same day and has been under pressure since then, along with XRP.
The constructive sentiment stands in clear contrast to Bitcoin’s risk reversal, which shows puts trading at a premium compared to calls on all tenors through September 2026 expiration. Clearly, BTC traders are still concerned about downside risk.
In the case of ETH, bearish trends prevail until December expiry options, with bullish pricing continuing for options expiring after that.
Risk reversals are widely tracked to measure market sentiment. However, it is worth noting that while the risk reversals associated with XRP and SOL are generally reliable, they may be less accurate indicators due to the relatively small market size, trading volume, and open interest compared to the billions of dollars seen in the Bitcoin and Ether options markets.
This can be partially attributed to the persistent put bias in Bitcoin options, especially quarterly and long-term maturities, as well as the widespread practice of call overwriting, where traders sell high-rights call options against long spot holdings to generate additional yield. In other words, the put bias reflects yield-creation efforts rather than outright bearish market sentiment.
Perps indicate neutral sentiment
Although XRP options have turned bullish, XRP perpetual futures are showing a more balanced market, consistent with neutral funding rates and sentiment seen in BTC, SOL, and ETH perpetual futures.
At the time of writing, the annualized perpetual funding rate (billed every eight hours) was hovering around zero, indicating neutral sentiment, according to data source Velo. This is the typical trader struggling to regain confidence after a price crash, as demand for leveraged bullish exposure across these major cryptocurrencies has been subdued.
The recent market crash led to the liquidation of $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 a cryptocurrency without an expiry date. These contracts use a funding rate mechanism. This is a periodic payment exchanged between traders holding long and short positions to bring the futures price into line with the spot price of the underlying asset.
A positive funding ratio means perpetual futures are trading at a premium to the spot price, indicating increased demand for leveraged bullish exposure. Negative interest rates suggest otherwise.