BITMD
BITMD
BITMD
  • Home
  • Privacy Policy
  • Contact Us
  • Sitemap
  • Cryptocurrency

Bitcoin price bounces to $41.5K, but derivatives data shows traders lack confidence

  • June 8, 2022
  • Gordon James
Total
0
Shares
0
0
0

The price of bitcoin bounced back to $41,500 Monday morning after dipping below the psychological $4000 mark earlier this month. However, traders are still unsure whether they should purchase bitcoins or not due to lack of confidence in derivatives markets which have shown little change since December 2017.

The “rate hike and crypto” is a topic that has been popular lately. The price of Bitcoin has bounced back to $41,500, but the derivative data shows traders lack confidence in the cryptocurrency.

Bitcoin (BTC) fell to $39,650 on Monday, indicating a 42.6 percent drop from the all-time high recorded on November 22, 2022. Some say that a “crypto winter” has already started, citing the $2.1 billion in leveraged long aggregate crypto futures contracts liquidated in the last seven days as evidence.

FTX’s Bitcoin/USD rate. TradingView is the source of this information.

The declining trend that has guided Bitcoin’s dismal performance for the last 63 days suggests that prices will fall below $40,000 by February.

Investor confidence continued to erode following the US Federal Reserve’s December FOMC meeting on January 5. In 2022, the monetary policy authority stated its intention to reduce its balance sheet and raise interest rates.

Kazakhstan’s political upheaval contributed to market pressure on January 5. Due to demonstrations, the country’s internet was shut down, causing Bitcoin’s network hashrate to drop 13.4 percent.

Futures traders remain unconcerned.

The futures premium, also known as the “basis rate,” may be used to determine how optimistic or bearish professional traders are.

The disparity between longer-term futures contracts and current market values is measured by this indicator. In robust markets, a 5 percent to 15% yearly premium is predicted, which is referred to as contango.

When this indication fades or goes negative, which is a circumstance known as “backwardation,” a red alarm appears.

Bitcoin price bounces to $41.5K, but derivatives data shows traders lack confidenceThe base rate for Bitcoin 3-month future contracts. Laevitas.ch is the source of this information.

It’s worth noting that the futures market premium hasn’t fallen below 7% in the last several months. Given the lack of Bitcoin price strength throughout this time, this is a fantastic signal.

Options traders are less optimistic.

To rule out futures-specific externalities, one need also look at the options markets.

The 25 percent delta skew compares call (buy) and put (sell) options that are comparable. When fear is prominent, this measure will become positive since the premium for protective put options is greater than for equivalent risk call options.

When greed is the dominant emotion, the 25 percent delta skew indicator shifts to the negative side.

Bitcoin price bounces to $41.5K, but derivatives data shows traders lack confidenceBitcoin options with a 25% delta skew from Deribit. laevitas.ch is the source of this information.

Neutral readings are those that fall within the negative and positive 8% range. On December 6, 2022, the 25 percent delta skew indicator reached the “fear” category at 10% for the first time.

Bitcoin falls below $40K for the first time in three months as worry ‘accelerates’

As a result, traders on the options markets are on the cusp of a neutral-to-bearish mindset since the indicator is now at 8%. Furthermore, since purchasing protective put options is getting increasingly costly, market makers and arbitrage desks are doubtful that $39,650 was the bottom.

Overall, the mood is bleak, and the $2.1 billion in aggregate futures contract liquidations indicate that derivatives traders’ longs (buyers) are rapidly losing faith. Only time will tell where the precise bottom is, but there is currently no evidence of substantial support from professional traders.

The author’s thoughts and opinions are purely his or her own and do not necessarily represent those of Cointelegraph. Every investing and trading decision has some level of risk. When making a choice, you should do your own research.

The “cointelegraph price analysis” is a blog post that discusses the recent Bitcoin price bounce. The article also includes some data to show traders lack confidence in the cryptocurrency market.

Related Tags

  • fed rates crypto
  • fed meeting crypto 2022
  • btc squeeze
  • btc fed news
  • btc dip prediction
Total
0
Shares
Share 0
Tweet 0
Pin it 0
Gordon James

Previous Article
  • Cryptocurrency

Billionaire investor Bill Miller puts 50% of net worth in Bitcoin

  • June 7, 2022
  • Gordon James
Read More
Next Article
  • Cryptocurrency

Associated Press Announces an NFT Platform for Buying Tokenized Photos

  • June 9, 2022
  • Gordon James
Read More
You May Also Like
Read More
  • Cryptocurrency

A year of mass adoption for cryptocurrencies in Brazil

  • Gordon James
  • June 30, 2022
Read More
  • Cryptocurrency

5 Best Crypto Games to Watch in January 2022

  • Gordon James
  • June 29, 2022
Read More
  • Cryptocurrency

Indian INX exchange reportedly plans to list Bitcoin futures ETF

  • Gordon James
  • June 29, 2022
Read More
  • Cryptocurrency

What to expect from the blockchain world in 2022? | Footprint Analytics Annual Report 2021

  • Gordon James
  • June 29, 2022
Read More
  • Cryptocurrency

Footprint Analytics: Will 2022 See the Emergence of GameFi 2.0? | Annual Report 2021

  • Gordon James
  • June 17, 2022
Read More
  • Cryptocurrency

DEESSE Token Sale is Launching on KuCoin

  • Gordon James
  • June 17, 2022
Read More
  • Cryptocurrency

Bitcoin shoots to $44,000 as US inflation hits 7% in December

  • Gordon James
  • June 17, 2022
Read More
  • Cryptocurrency

Arkania Protocol Launch Multi-Chain Launchpad Making IDOs Accessible to All

  • Gordon James
  • June 14, 2022
Do Read
  • 1
    Hong Kong brokerage Futu halts crypto futures over regulatory issues
  • 2
    5 Best Crypto Games to Watch in January 2022
  • 3
    Binance Slash Bitcoin Withdrawal Fees By 50%
  • 4
    Best ICO, IEO, IDO List 2021- Top Ongoing And Upcoming Token Sales
Read More
  • Filipinos Can Now Cash in Crypto Without Fees Through Moneybees OTC Outlets – Press release Bitcoin News
    • June 4, 2021
  • VC Backed Billion-Dollar Stablecoin Project Fei Protocol Falls Below the USD Peg – Bitcoin News
    • April 14, 2021
  • Papa John’s Giving Away BTC With Pizza Purchases in UK
    • May 12, 2021
  • 5 Coins To 5 Million Review: Is Teeka Tewari’s List of Coins Legit?
    • September 19, 2021
  • Crypto investors ask Elon Musk to stop tweeting about cryptocurrencies
    • May 24, 2021
Recent Posts
  • A year of mass adoption for cryptocurrencies in Brazil
    • June 30, 2022
  • Indian INX exchange reportedly plans to list Bitcoin futures ETF
    • June 29, 2022
  • What to expect from the blockchain world in 2022? | Footprint Analytics Annual Report 2021
    • June 29, 2022
BITMD
  • Home
  • Privacy Policy
  • Contact Us
  • Sitemap
The Crypto Doctor

Input your search keywords and press Enter.