Bitcoin enjoyed a target of turning around $ 30K to support, but derivatives data show that traders lack confidence

Bitcoin enjoyed a target of turning around $ 30K to support, but derivatives data show that traders lack confidence – Mail Bonus

Bitcoin (BTC) jumped 19% from the $ 25,400 low on May 12, but has investor confidence in the market been restored? Given the increasing channel formation, it is possible that the bull has at least plans to recover the $ 30,000 step in a short period of time.

Bitcoin / USD 4 hour price on Bitstamp. Source: TradingView

Does derivative data support a $ 30,000 recovery, or is Bitcoin possibly on its way to another leg after not breaking over $ 31,000 on May 16th?

Bitcoin prices are falling in the face of regulatory concerns and the Terra problem

One factor that puts pressure on BTC prices could be the Luna Foundation Guard (LFG) which sells 80,081 Bitcoin, or 99.6%, of its position.

On May 16, LFG released information on the remaining crypto insurance and on the other hand, the sales risk of this project has been eliminated, but investors doubt the stability of other stablecoins and the distributed financing (DeFi) of their applications.

Recent comments from FTX CEO Sam Bankman-Fried on proof of work (PoW) mining environmental and flexibility issues further fueled the current negative sentiment. According to Bankman-Fried, the use of Proof of Share (PoS) consensus is better suited to meet the needs of millions of transactions.

On May 14, a local UK newspaper reported on the Treasury’s plans to manage stablecoins across the UK. According to a spokesman for the Ministry of Finance, the plan does not involve legalizing algorithmic stablecoins and prefers 1: 1 full-backed stablecoins.

While this news may have affected market sentiment and BTC prices, let’s look at how larger traders are positioned in futures and options markets.

Bitcoin futures show resilience

The basic indicator measures the difference between long-term forward contracts and current market levels. The annual premium for the future of Bitcoin should be between 5% and 10% to compensate traders for “locking” the money for two to three months until the contract expires. Points below 5% are bearish, but figures above 10% indicate excessive demand from longs (buyers).

Bitcoin 3 months future premium per year. Source: Laevitas

The chart above shows that the Bitcoin index fell below the 5% neutral threshold on April 6, but there has been no panic after the sale to $ 25,400 on May 12. This means that the measure is slightly positive.

Even though the baseline indicator is that the sentiment is bright, one must remember that Bitcoin has fallen by 36% so far this year and 56% below the $ 69,000 historical high.

Connected: $ 1.9T Encryption Risk Spills Stock, Stablecoin Tether in Focus

Options traders are more than stressed

The 25% delta error option is extremely useful because it shows when the Bitcoin arbitration board and market makers are charging too much for upside or down protection.

If options investors fear a collapse in Bitcoin prices, the error indicator will exceed 10%. On the other hand, the general voltage reflects a negative 10% error.

Bitcoin 30 day options 25% delta error: Source: Laevitas

The error rate exceeded 10% on April 6 and entered the “fear” level because traders with options charged too much for side defense. However, the current 19% score is still very bearish and the recent 25.5% was the worst reading that has been recorded for a scale.

Although the future spread of Bitcoin has been resilient, the indicator shows a lack of interest from long-term buyers. In short, BTC options markets are still stressed, suggesting that professional traders are not sure that the current rising channel pattern will hold.

The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Cointelegraph. Every investment and business involves risk. You should do your own research when making a decision.