Looks like Bitcoin’s price has hit the resistance zone as the coin trades 7.75% below the all-time high seen in the past few weeks. Despite this impending price stall, derivatives data reveals that pro traders are on the lookout for the $80,000 mark in January.
It is always cumbersome to select a timeframe for technical analysis, but most often, the longer the trend, the higher the odds of it prevailing. A good example is those analysing the three-month Bitcoin (BTC) chart – these traders will identify an ascending channel pattern that started its upward motion in late June.
Bitcoin price in USD on FTX. Obtained from: TradingView
Bears will also come into the picture and try to unarguably justify their views regardless of BTC hitting its new all-time highs after the United States consumer price surged to 6.2%. This was the biggest inflation surge seen in the US economy in three decades.
Data from Glassnode, an on-chain analytics firm, reveals that long-term investors are steering away from net accumulating and have diversified their digital asset portfolios into altcoins. Analyst, William Clemente, claims that the recent net selling witnessed among this class of investors was the first in six months. This is an indicator of a “sell into strength” move.
It is good to note that the Bitcoin network got an upgrade on Nov. 14 that helped improve its privacy and scripting capabilities. Looking at this information from a trading perspective, it creates a likely “sell the news” event, since this improvement was much anticipated by the community.
Before one dives into understanding how bullish or bearish professional traders are leaning, they should first analyse the futures basis rate. This is an indicator mostly called the ‘futures premium’, and through it, one can measure the difference between the current spot market levels and longer-term futures contracts.
In a healthy market, users should expect a 5%-15% annualized premium, which is a situation referred to as contango. This price difference comes about after sellers demand more money to withhold settlement longer.
Bitcoin 3-month futures basis rate. Obtained from: Laevitas.ch
This chart clearly shows that on Nov. 9 a spike was witnessed to 20% as BTC accumulated 14% gains in three days. However, this brief excessive optimism retracted when the coin corrected by 9%, going below the $69,100 all-time high of Nov. 10.
At the moment there is confidence among pro traders since the basis indicator stands at a healthy 12%.
Analyzing options markets is also important as this excludes the externalities specific to the futures instrument.
Deribit BTC options 25% delta skew. Obtained from: Laevitas.ch
Looking at the current 25% delta skew, one can interpret it as a “glass half full” scenario because pro traders are not fazed by the 95% gains year-to-date.
Image courtesy of pixabay
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