$29K Bitcoin is closer than you might expect, according to derivatives data

The Bitcoin (BTC), price is still fighting at the $24,000 resistance. Although the price was rejected there on August 10, the rejection wasn’t enough to remove the price from the ascending channel of 52 days. This channel has a $22,500 support, and this bullish formation indicates that the BTC market will eventually reach the $29,000 mark by October.

Bitcoin/USD 12-hour price. Source: TradingView

Bitcoin derivatives data shows a lack in interest from leveraged bulls, but it doesn’t price higher chances of a surprise crash. Curiously, the latest Bitcoin downturn of Aug. 9 was associated with a negative performance by U.S.-listed stock.

Nvidia Corp (NVDA), a chip-and-video graphics card manufacturer, announced on Aug. 8 that it would see a 19% decrease in its 2Q sales compared to the prior quarter. The U.S. Senate also passed a bill that could have a negative impact on corporate earnings. The provision, which would impose a 1% Tax on stock buybacks by publicly traded companies, even though it allows $430 billion for “climate and healthcare” funding, would allow for $430 billion in additional funds.

Investors remain concerned about the high correlation between traditional assets and cryptocurrencies. Even if inflationary pressure drops, investors should not get ahead of themselves. The U.S. Fed closely monitors employment data. The most recent reading showed a 3.5% unemployment, which is typical for overheated markets. This forces the monetary authority and stimulus debt purchase programs to continue raising interest rates.

Reduced risk should be the norm, until investors indicate that the U.S. Central Bank will ease its tighter monetary policies. This is exactly why crypto traders closely follow macroeconomic numbers.

Bitcoin is currently not strong enough to break the $24,000 resistance. However, traders should look at derivatives in order to gauge professional investors’ sentiment.

Bitcoin derivatives metrics are neutral-to-bearish

The annualized premium for Bitcoin futures measures the difference between the current spot market level and longer-term futures contracts. To compensate traders who “lock in” the money to the expiry of their contracts, the indicator should be between 4% and 8%. Therefore, levels below 2% can be considered extremely bearish while numbers above 10% are excessively optimistic.

Annualized premium for Bitcoin 3-month futures. Source: Laevitas

This chart shows that the metric fell below 4% in June 1st, reflecting traders’ lackluster demand for long (bull) leverage positions. The current 2% reading isn’t particularly alarming, considering that BTC has fallen 51% over the past year.

Trader must also examine Bitcoin options markets to exclude externalities that are not related to futures instruments. A sign that arbitrage desks or market makers are charging too much for downside or upside protection is the 25% delta skew.

Related: Bitcoin Price Sees $24K, Ethereum Hits 2-Month High As US Inflation Drops

The skew indicator will rise above 12% if these traders fear a Bitcoin crash. Generalized excitement, however, reflects a negative 12 percent skew.

Bitcoin 30-day options 25 % delta skew Source: Laevitas

The skew indicator’s range has been between 3% to 5% since Aug. 5. This is considered a neutral zone. Options traders are not charging too much for downside protection. This may be a sign that they lack excitement but have largely abandoned the fear-based sentiment of the past few months.

According to futures market data, Bitcoin investors shouldn’t worry about the lackluster buying demand given Bitcoin’s current channel pattern.

There is healthy skepticism in derivatives metrics. However, the path to $29,000 BTC remains clear so long as inflation and employment statistics remain under control.

Risk is inherent in every investment or trading move. Before making any investment or trading decision, you should do your research.


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Donna Burk

Donna Burk– Business News My Name is Donna Burk and I am also the main source from the ‘Dailynewssheet.com’ of all the exclusive and most delicate visualization of the activities in the business sector. My first step towards this journey was taken in the very early years of my life. I started with an independent financial consultant. However, I only had almost 4 years of skills and experience in this market. I have always been a free personality and like to fly one place to another, to explore more and more. Moreover, this passion and craze of traveling gave me a chance to report a section for best news associations. Last but not least, I am presently working full-time as an editor.

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