12.5 C
New York

Bulls in an interesting risk-reward situation with Bitcoin’s Current setup.


Bitcoin (BTC) chart formed a symmetrical triangle, holding a range from $28,900- $30,900. With a pattern that has held for two weeks and could extend for another few weeks. According to the Bitcoin derivatives data, investors are pricing higher odds of a downturn, however improvements in the global economic perspective may take them by surprise. 

Improvements in macro scenario means BTC miners are staying busy

According to Cointelegraph, United States driven macroeconomic conditions helped increase crypto markets today, May 23rd. Before the market opened, Biden announced  plans to cut China trade tariffs, which boosted investor morale. 

The latest estimates suggest that Bitcoin’s network difficulty will reduce by 3.3% at its next readjustment week. It is expected to be the largest downward shift since Mid 2021. 

Miners are not showing signs of capitulation even though their movement exchanges hit a 30 day low. 

It is important to track whales and market markers are positioned in the markets as opposed to miner sentiment and flows. 

Bitcoin derivatives metrics are neutral-to-bearish. 

Retail traders typically avoid quarterly futures because of their fixed settlement date and price difference from the spot markets. Despite this, the biggest advantage is the lack of a fluctuating funding rate.

These kinds of fixed month contracts trade at a slight premium to spot markers due to the sellers requesting more money to withhold settlements longer. This is known as “contango” and does not happen only in crypto markets. 

Since April 12th, Bitcoin’s basis indicator has been below 4%. What’s encouraging  is the fact that it has not deteriorated after the sell-off down to $25,00 on May 12th. 

In order to exclude externalities specific to the futures instrument, traders must also analyze the Bitcoin options markets. The 25% delta skew is useful because it displays when Bitcoin arbitrage desks and makers  are overcharging for upside or downside protection. 

Be brave when things look scary

The BTC options markets are still stressed which suggests that professional trades lack confidence in taking a downside risk. The futures premium is somewhat resilient, however, shows a lack of interest from leveraged long buyers. 

A bullish bet might seem contradictory, an unexpected price jump would surprise professional buyers, creating an interesting risk-reward system for Bitcoin bulls.

Related articles

Recent articles