The price of Bitcoin is back above $ 50,000, but how “bullish” are the bulls?
The Bitcoin futures markets premium and options risk indicator shows no signs of excessive leverage or FOMO by traders – yet.
Cryptocurrency markets have risen 12.5% in the past seven days to reach a market capitalization of $ 2.44 trillion. However, this move does not appear to inspire confidence, as the same level was tested 16 days ago when a 27% retracement followed Ethereum’s (ETH) attempt to break out of $ 3,650 USD over the next six days.
Regulation appears to be a key factor for buyers, as the US House of Representatives is expected to vote on the $ 1 trillion infrastructure bill this month. In addition to defining who qualifies as a broker, the legislation would impose anti-money laundering (AML) requirements and meet your customer type requirements (KYC) on many types of cryptocurrency transactions, which could also be detrimental to DeFi protocols. .
The 8 best cryptocurrency performances for 7 and 30 days
As noted above, the negative performance seen in the top 10 cryptocurrencies has had an impact on investor sentiment over the past 30 days. For this reason, it is important to measure more than the nominal price of Bitcoin (BTC). Traders should also look at indicators of Bitcoin derivatives, such as futures premium and option skew.
Futures Premium Shows Traders Slightly Bullish
The base rate is also known as the term premium and measures the difference between long-term futures contracts and current spot market levels.
An annualized premium of 5% to 15% is expected in healthy markets, a situation known as contango. This price difference is due to the fact that sellers ask for more money in order to withhold payment for longer.
3-month Bitcoin futures on an annualized basis
As illustrated above, the current 9% annualized premium is neutral but shows an improvement over the previous two weeks. This indicates that traders are cautiously bullish, leaving room for further leverage when sentiment fully recovers.
Option traders leave fear mode
To exclude the specific externalities of the futures instrument, it is also necessary to analyze the options markets.
The 25% delta bias compares similar call (buy) and put (sell) options. The metric will turn positive when “fear” prevails, as the premium for protective put options is higher than similar risk options.
The reverse is true when market makers are bullish, pushing the 25% delta skew indicator into the negative zone. Readings between minus 8% and plus 8% are generally considered neutral.
Deribit BTC Options 25% Delta Deviation
Watch as Bitcoin options traders entered the “fear” level on September 25 when the $ 41,000 support was tested multiple times. However, there has been a drastic change since September 30 and the indicator is now in a neutral zone.
As it stands, the 25% skew of the futures and options base shows a typical “glass half full” scenario. This means that even though Bitcoin reached its highest level in 27 days and breaks resistance at $ 50,000 USD, there is still room for buyers to rely on additional leverage before the measures turn on signs of overextension or euphoria.
A breakout of $ 50,000 USD with the current scant derivatives data would generally be interpreted as weakness. However, given that the total cryptocurrency market capitalization is still in the same place as 30 days ago and regulatory concerns have not been mitigated, there is no cause for concern. Right now, neither the futures nor the options markets are showing signs of falling.
Par Marcel Pechman, Cointelegraph
Marcel is a crypto analyst with 17 years of experience as a stock seller for UBS, Deutsche Bank, Pactual, and Banco Safra. Brazilian. Marcel has a graduate certificate in engineering and a bachelor’s degree in business administration.
The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Forex Quebec. Every investment and business move carries risk, you should do your own research when making a decision.
Keep your cryptocurrencies safe!
The Ledger wallet is the storage device the most advanced to hold and use Bitcoin and other cryptocurrencies safely.
To get Ledger Wallet Nano S » Visit the official website
Disclaimer: The information and opinions contained in this report are provided for general information only and do not constitute an offer or a solicitation to buy or sell currency or CFD contracts. Although the information contained in this document has been taken from sources considered reliable, the author does not guarantee its accuracy or completeness, and does not assume responsibility for any direct, indirect or consequential damages that may result from the fact that someone trusts such information.