Bitcoin (BTC) price is still struggling at the $24,000 resistance and the price was rejected there on Aug 10, but the rejection was not enough to break the price out of the 52-day ascending channel. The channel has support at $22,500 and this bullish formation suggests that the price of BTC will eventually reach the $29,000 level in early October.
Bitcoin derivatives data shows a lack of interest from leveraged longs (bulls), but at the same time, they do not price in the increased odds of a surprise drop. Curiously, Bitcoin’s latest crash, on August 9, was accompanied by a negative performance of US-listed securities.
On August 8, video graphics card and chip maker Nvidia Corp (NVDA) announced that its second quarter sales would show a 19% drop compared to the previous quarter. Also, On August 6, the US Senate approved a bill that could negatively affect the profits of companies. Despite freeing up $430 billion to fund “climate, health and taxes,” the provision would impose a 1% tax on share buybacks by publicly traded companies.
The high correlation of traditional assets with cryptocurrencies remains a major concern for some investors. Investors should not jump ahead of events, even if inflationary pressure recedes, because the US Federal Reserve is keeping a close eye on jobs data. The latest reading showed unemployment at 3.5%, typical of overly hot markets, forcing the monetary authority to continue raising interest rates and revoking debt purchase stimulus programs.
Reducing risk positions should be the norm until investors clearly indicate that the US Central Bank is closer to easing tighter monetary policies. Precisely for this reason, cryptocurrency traders follow macroeconomic figures so closely.
Bitcoin currently lacks the strength to break the $24,000 resistance, but traders should study derivatives to gauge professional investor sentiment.
Bitcoin Derivatives Metrics Neutral to Bearish
The annualized premium for Bitcoin futures measures the difference between long-term futures contracts and current cash market levels. The indicator should range between 4% and 8% to compensate traders for “locking up” money until contract expiration. Thus, levels below 2% are extremely bearish, while figures above 10% indicate excessive optimism.
The chart above shows that this metric dipped below 4% on June 1, reflecting a lack of trader demand for long (bullish) leverage positions. However, the current reading of 2% is not particularly concerning, given that BTC is down 51% year-to-date.
To exclude the specific externalities of the futures instrument, traders should also analyze the Bitcoin options markets. The 25% delta deviation is a telltale sign when arbitrage desks and market makers overcharge for upside or downside protection.
If those traders fear a Bitcoin price drop, the bias indicator will move above 12%. On the other hand, the general excitement reflects a negative tilt of 12%.
The data shows that the tilt indicator has hovered between 3% and 5% since August 5, which is considered a neutral zone. Option traders are no longer overloading downside protection, which means they may be lacking in emotion, but at least they have abandoned the “scared” sentiment seen in recent months.
Considering Bitcoin’s current ascending channel pattern, Bitcoin investors probably shouldn’t worry too much about a lack of buying demand, according to futures market data.
Of course, there is healthy skepticism reflected in the derivatives metrics, but the path to a $29,000 BTC price remains clear as long as inflation and employment statistics are under control.
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