Bitcoin's short-term outlook improved slightly, but most traders are far from optimistic

Bitcoin’s short-term outlook improved slightly, but most traders are far from optimistic – Mail Bonus


A faint sense of hope emerged among Bitcoin (BTC) investors after the June 18 drop of $ 17,600 became more distant and an early rising pattern points towards $ 21,000 in the short term.

Bitcoin 12 hour USD price on FTX. Source: TradingView

Recent negative comments from MPs continued to dampen investor optimism. In an interview with the Cointelegraph, Thomas Muser, Deputy Governor of the Swiss Central Bank (SNB), said that the DeFi system would cease to exist if the current financial rules were implemented in the cryptocurrency industry.

An article published in The People’s Daily on June 26 mentioned Terra (LUNA), now renamed Terra Classic (LUNC), the collapse of the network and local blockchain expert Yifan He, who referred to cryptography as the Ponzi scheme. When asked to explain the statement on June 27, the Cointelegraph said that “all irregular cryptocurrencies, including Bitcoin, are Ponzi schemes based on my understanding.”

On June 24, Sopnenda Mohanty, fintech chief executive of the Singapore Monetary Authority (MAS), vowed to be “cruel and ruthlessly harsh” on any “bad behavior” from the cryptocurrency industry.

Finally, Bitcoin investors are facing a mixed attitude, with some believing that the bottom has been reached and $ 20,000 support. Meanwhile, others fear the impact that a global recession could have on risky assets. For this reason, traders should analyze derivatives market data to understand whether traders are pricing a higher probability of a downturn.

Bitcoin future shows a balance between buyers and sellers

Retailers usually avoid monthly futures because their prices are different from the usual local markets on Coinbase, Bitstamp and Kraken. However, these are optimal tools for professionals as they avoid fluctuations in the funding ratio of perpetual contracts.

These fixed-term contracts usually trade with a slight premium in the local market because investors demand more money to hold on to the settlement. As a result, futures contracts should trade at a 5% to 10% annual spread in healthy markets. One should keep in mind that this feature is not just for the cryptocurrency market.

Bitcoin 3 months future premium per year. Source: Laevitas

Whenever this indicator fades or becomes negative, it is a frightening, bearish red flag that indicates a situation called backward. The fact that the average spread barely touched the negative zone while Bitcoin traded down to $ 17,600 is remarkable.

Despite having a very low future spread (base interest rate) at present, the market has maintained a balance of demand between indebted buyers and sellers.

To exclude external effects specific to the futures instrument, traders must also analyze the Bitcoin options market. For example, the 25% delta error shows when Bitcoin whales and type desktops are overloaded for side or upside protection.

In emerging markets, option investors are more likely to fall in price, causing the error indicator to rise above 12%. On the other hand, a general FOMO in the market causes a negative 12% error.

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

After peaking at 36% on June 18, the highest record since the beginning, the indicator returned to 15%. Option markets show great risk aversion until June 25, when the 25% delta error finally went below 18%.

The current 25% error indicator continues to show a greater risk of inconvenience from professional traders, but it no longer sits at levels that reflect high risk aversion.

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The bottom could be in according to the data on the chain

Some surveys suggest that Bitcoin bottomed out on June 18 after miners sold significant amounts of BTC. According to the Cointelegraph, this indicates that hacking has already taken place and Glassnode, a chain analysis company, showed that the Bitcoin Mayer multiple fell below 0.5, which is extremely rare and has not happened since 2015.

Whales and arbitration agencies may take some time to adjust after key players such as Three Arrows Capital face severe recession and liquidation risk due to liquidity shortages or excessive indebtedness. Until there is ample evidence that the risk of infection has been mild, Bitcoin prices will likely continue to trade below $ 22,000.

The views and opinions expressed herein are theirs alone author 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.