Bitcoin (BTC) last closed above $ 45,000 66 days ago, but more importantly, the current level of $ 39,300 was first seen on January 7, 2021. The 13 months of boom and bust cycles reached their climax when the price of bitcoin reached $ 69,000 in November. 10. 2021.
It all started with the US Securities and Exchange Commission (SEC) VanEck Spot Bitcoin refusing to trade on the stock exchange on November 12, 2020. Although the decision was largely expected, the regulator strongly and directly supported the reasons for the rejection.
It is strange that about a year later, on November 10, 2021, the cryptocurrency market jumped to a record high of $ 3.11 trillion, and inflation in the United States, according to the CPI, reached 6.2%, a 30-year high.
Inflation has also had a negative impact on the risk markets, as the US Federal Reserve on 30 November 2021 acknowledged that inflation is more than a “temporary” problem and suggested that the downturn could come faster than expected.
Most recently, March 10, the US Senate passed a $ 1.5 trillion package now awaiting President Joe Biden’s signature. The new money is the first budget increase since former President Donald Trump left office.
The data show that professional traders are reluctant to hold long positions.
To understand how professional traders, including whales and market makers, position themselves, let’s take a look at bitcoin futures and options market data. The underlying index measures the difference between long-term futures contracts and current spot market levels.
The annual premium for bitcoin futures should be in the range of 5% to 12% to compensate traders for “holding” funds for two to three months before the contract expires. Levels below 5% are very bearish, while measurements above 12% indicate a trend.
Annual premium on bitcoin futures for 3 months. Source: Laevitas.ch
The chart above shows that this fell below 5% on 11 February, and professional traders have not yet signaled confidence.
However, it would not be wrong to assume that a possible breach of the $ 44,500 resistance level would surprise these investors by creating strong buying activity to cover short positions.
Option traders are less concerned about lower risk
At the moment, Bitcoin seems to be fluctuating quite around $ 40k, making it difficult to determine the direction of the market. A skewed participation of 25% is an important sign that arbitrators and market makers inflate prices to protect against an up or down trend.
If these traders fear a crash in the price of bitcoin, the skew indicator will rise above 10%. On the other hand, generalized agitation reflects a negative deviation of 10%. This is why the scale is known as the scale of fear and greed for professional traders.
30-day bitcoin options with a 25% delta bias: Source: Laevitas.ch
As shown above, from 28 February to 8 March, the deviation index fluctuated between 7% and 11%. Although it does not accurately indicate fear, these options traders require large margin downside protection.
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The last 3 days have shown a significant improvement and at the moment the delta deviation of 4% shows a more balanced state. When it comes to BTC option markets, there are similar risks of unexpected up and down price fluctuations.
The mixed bitcoin derivative data provides an interesting opportunity for bulls. The cheap forward premium offers long-term mortgage options at a relatively low price, while the negative protection runs at its lowest level in thirty days.