Wednesday, September 28

Bitcoin Price Reappears As 3 Indicators Reflect BTC’s Strength


The price of Bitcoin (BTC) is still 4.4% below its August 23 high at $ 50,500, leading some traders to question whether the local high marked the end of the recent 34-day bull run. .

Even with the current correction, the derivatives data and the moves of professional investors do not show any bearish signs.

Bitcoin price in USD on Coinbase. Source: TradingView

On August 24, prominent technical analyst John Bollinger suggested that the price of Bitcoin could decline in the short term. A pseudonymous market analyst named ‘CryptoHamster’ shared a similar bearish outlook based on the analysis of a technical pattern called an ascending channel.

Bearish news coming from the exchange’s regulation could have dampened investor interest as well, and this week the UK’s Financial Conduct Authority (FCA) released a supervisory notice against the Binance exchange.

In accordance with regulatory action this week, the exchange was asked to remove its ads and live promotions on Binance’s website and social media.

An uptrend can be seen in the futures markets

To assess whether professional traders have turned pessimistic, analysts must monitor the futures premium, also known as the ‘base’. This indicator measures the price gap between futures prices and the regular spot market.

The one-month contract should trade at an annualized premium of 6% to 14% in healthy markets because sellers demand a higher price to postpone settlement, creating a price difference.

Huobi 1-month futures basis. Source: Skew

Notice how the indicator has improved from a neutral to bearish 4% annualized premium on August 19 to a healthier level of 9%. This shows that the metric is moving in the opposite direction to the zone, which would be considered bearish.

The relationship between long and short of the main operators remains optimistic

To effectively measure how professional traders position themselves, investors should monitor the long-to-short ratio of top traders on major crypto exchanges. This metric provides a broader view of traders’ effective net position by collecting data from multiple markets.

BTC long / short ratio of the best traders. Source: Bybt.com

It’s worth noting that exchanges collect data on top traders differently because there are multiple ways to measure a client’s net exposure. Therefore, any comparison between different providers should be made on percentage changes rather than absolute numbers.

Both OKEx and Huobi showed an increase in the long-short ratio of the major traders, indicating that they either closed short positions or opened long positions, which is a bullish move. Binance was the only exception because the indicator fell, indicating some pessimism, but the variation in recent days has been negligible.

Options markets are slightly bullish

The 25% delta bias compares similar call (buy) and put (sell) options side by side. It will turn positive when the premium for hedging put options is higher than similar risk calls.

The opposite occurs when market makers are bullish, and this brings the 25% delta bias indicator into the negative range.

Deribit Bitcoin Options 25% delta deviation. Source: laevitas.ch

The chart above shows that there was some downtrend prior to July 19, but the Bitcoin options markets have turned neutral since then. Also, there are no signs that professional traders are increasingly concerned about a possible price drop because the 25% bias indicator remains close to zero.

Both the futures and options markets show investor confidence despite worrying technical analysis and the unstable regulatory environment.

Consequently, at least according to the derivatives markets, the falls are to buy.

The views and opinions expressed here are solely those of the Author and do not necessarily reflect the views of Cointelegraph. Every investment and trade movement involves risk. You should do your own research when making a decision.