Pro Bitcoin traders are uncomfortable with bullish positions

Pro Bitcoin traders are uncomfortable with bullish positions – Mail Bonus


The previous $ 19,000 Bitcoin (BTC) support level will be further removed after the 22.5% increase in nine days. However, little optimism has been instilled as the effects of the Three Arrows Capital (3AC), Voyager, Babel Finance and Celsius crises remain uncertain. In addition, the infection has claimed another victim after the Thai cryptocurrency exchange Zipmex stopped audits on July 20.

Bitcoin / USD 1 day price. Source: TradingView

The Bulls’ hopes are that the $ 23,000 support will strengthen over time, but derivatives show that professionals are still very skeptical about a steady recovery.

Macroeconomic headwinds are in short supply

Some analysts attribute the strength of the cryptocurrency market to China’s data on GDP, which is lower than expected, prompting investors to expect further political expansion. China’s economy grew by 0.4% in the second quarter compared to the previous year, as the country continued to struggle with self-imposed restrictions to stem another outbreak of COVID-19 infections, according to CNBC.

9.4% inflation in the UK in June marked a 40-year high and to help the public, Finance Minister Nadhim Zahawi announced a $ 44.5 billion (GBP 37 billion) aid package for vulnerable families.

Under these circumstances, Bitcoin reversed its downturn as politicians struggled to solve the seemingly impossible problem of slowing down economies amid growing government debt.

However, the cryptocurrency sector faces its own problems, including uncertainty about rules. For example, on July 21, the US Securities and Exchange Commission (SEC) marked nine symbols as “cryptocurrency securities” and were therefore not only covered by the regulator but also responsible for not registering with it.

The SEC referred directly to Powerledger (POWR), Kromatika (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Governance Token (RGT), DerivaDAO (DDX), LCX and XYO. The regulator sued former Coinbase product manager for “insider trading” after using unofficial information for personal gain.

Currently, Bitcoin investors are facing too much uncertainty despite a seemingly useful macroeconomic background, which should be supported by scarce stocks such as BTC. For this reason, derivatives analysis is valuable for understanding whether investors are pricing a higher probability of a downturn.

Professionals are still skeptical about inflation

Retailers usually avoid quarterly futures because of their price differences from local markets. However, they are the preferred tool of professionals because they prevent perpetual fluctuations in the financing ratios of contracts.

These fixed-term contracts usually trade with a slight premium to the placement markets because investors demand more money to hold on to the settlement. But this situation is not limited to cryptocurrencies, so futures contracts should trade at a 4% to 10% annual fee in healthy markets.

Bitcoin 3 months future premium per year. Source: Laevitas

Bitcoin futures flirted with the negative zone in mid-June, something usually seen during very bearish periods. Only 1% base rate, or annual premium, reflects the reluctance of professionals to create indebted long (bull) positions. Investors are still skeptical about the inflation despite the low cost of opening bullish trades.

The Bitcoin options market must also be analyzed to rule out external influences that are specific to the future device. For example, the 25% delta error is a descriptive signal when market makers and arbitration desks are overloaded for upside down or down protection.

In bear markets, option investors are more likely to fall in price, causing the error indicator to rise above 12%, while the opposite is true in the bullish market.

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

The 30-day delta error peaked at 21% on July 14 as Bitcoin struggled to break the $ 20,000 resistance. The higher the indicator, the less likely traders are to offer protection.

Recently, the indicator went below the 12% threshold, entered a neutral zone and no longer sat at the levels that reflect great hostility. As a result, options markets are now showing a balanced risk assessment between the bull run and another re-examination in the $ 20,000 area.

Some indicators suggest that the bottom of the Bitcoin cycle is behind, but until traders have a better view of the prospects and liquidity of centralized cryptocurrency providers as the Three Arrows Capital crisis develops, the chances of breaking over $ 24,000 are uncertain.

The views and opinions expressed herein are solely theirs 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.