Choosing a time frame for technical analysis is always a challenge, but usually the longer the trend, the more likely it is to dominate. For example, those analyzing the three-day Bitcoin (BTC) chart undeniably identify a bullish channel pattern that began in late June.
Bitcoin price in USD on FTX. Source: Tradingview
The Bears will always find ways to justify their opinion, despite the fact that bitcoin reached a record high level after US consumer prices rose to 6.2%, the largest increase in inflation in 30 years.
However, data from network analyst firm Glassnode shows that long-term investors have stopped online hoarding and are now diversifying into altcoins. According to analyst Willian Clemente, the latest net sales from this class of investors were the first in 6 months, indicating “strong sales.”
It is worth noting that the Bitcoin network was updated on November 14 to improve programming and privacy. From a business perspective, this creates a potential “sales news event”, as this improvement was expected by society.
The data show that professional traders become neutral upwards.
To understand how professional traders tend to be bullish or bearish, it is necessary to analyze the base rate of futures contracts. This index is often referred to as the futures premium and measures the difference between long-term futures contracts and current spot market levels.
You are expected to receive between 5% and 15% of the annual premium in healthy markets, a situation known as contango. This price difference is due to sellers asking for more money to postpone the settlement for a longer period.
The base price of a 3-month bitcoin futures contract. Source: Laevitas.ch
Note the 20% increase on November 9 when Bitcoin gained 14% in 3 days. The short period of over-optimism faded after BTC recovered 9% from a record high of $ 69,100 on November 10.
The underlying index is currently at a healthy level of 12%, indicating confidence in these traders.
Option traders are not optimistic
In order to exclude externalities from a futures instrument, it is also necessary to analyze the options markets.
A delta deviation of 25% compares similar buy (buy) and sell (sell) alternatives. The indicator will be positive when fears increase because the premium on protective calls is higher than comparable risk calls.
The opposite occurs when the prevailing mood is greed, which makes 25% delta skew negative.
Deribit BTC alternatives 25% delta deviation. Source: Laevitas.ch
An index for deviations from -8% (greed) to + 8% (fear) is considered neutral. September 29, the last time the index went outside this range, reaching + 10%. Oddly enough, the same day ended the 23-day downtrend, which lifted bitcoin from $ 52,700 on September 6 to $ 41,000.
As for the current delta-neutral deviation of 25%, it can be interpreted as “half-full glass”, because professional traders are a little not worried about the gain of 95% since the beginning of the year.
The data show that there is room for further influence from bitcoin buyers who will ideally see the price continue to trade in the upward channel that started at the end of June.