Autor Cointelegraph By Marcel Pechman

Data suggests traders view $46,000 as Bitcoin’s final line in the sand

Data suggests traders view $46,000 as Bitcoin’s final line in the sand

Uverejnil používateľ | dec 14, 2021 |

Dec. 13 will likely be remembered as a “bloody Monday” after Bitcoin (BTC) price lost the $47,000 support, and altcoin prices dropped by as much as 25% within a matter of moments. When the move occurred, analysts quickly reasoned that Bitcoin’s 8.5% correction was directly connected to the Federal Open Market Committee (FOMC) meeting which starts on Dec. 15.Investors are afraid that the Federal Reserve will eventually start tapering, which simply put, is a reduction of the Federal Reserve’s bond repurchasing program. The logic is that a revision of the current monetary policy would negatively impact riskier assets. While there’s no way to ascertain such a hypothesis, Bitcoin had a 67% year-to-date gain until Dec. 12. Therefore, it makes sense for investors to pocket those profits ahead of market uncertainties and this could be connected to the current correction seen in BTC price.Top cryptos weekly performance on Dec. 13. Source: NomicsBitcoin price retraced 8.2% over the past week, but it also outperformed the broader altcoin market. That is in stark contrast to the last 50 days because the leading cryptocurrency’s market share (dominance) dropped from 47.5% to 42%. Investors could have simply fled to Bitcoin due to its relatively smaller risk than altcoins.Tether’s discount bottomed at 4%The OKEx Tether (USDT) premium or discount measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar currency. Figures above 100% indicate an excessive demand for cryptocurrency investing. On the other hand, a 5% discount usually indicates heavy selling activity.OKEx USDT peer-to-peer premium vs. USD. Source: OKExThe Tether indicator bottomed at 96% on Dec. 13, which is slightly bearish but not alarming for a 10% total cryptocurrency market capitalization drop. However, it has been over two months since this metric surpassed 100%, signaling a lack of excitement from China-based traders.To further prove that the Dec. 13 price crash only slightly impacted investor sentiment, the total liquidations over the 24 hours was $400 million.Total derivatives exchange liquidations on Dec. 13. Source: Coinglass.comMore importantly, only $300 million of long leverage contracts were forcefully terminated due to insufficient margin. This figure looks insignificant when compared to the Dec. 3 crash, when $2.1 billion of leveraged buyers had their positions closed.There’s no excessive demand from Bitcoin bears, at the momentTo further prove that the crypto market structure was not strongly affected by the sharp price drop, traders should analyze the perpetual futures. These contracts have an embedded rate and usually charge a fee every eight hours to balance the exchange’s risk. A positive funding rate indicates that longs (buyers) are demanding more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, and this causes the funding rate to turn negative.Bitcoin perpetual futures 8-hour funding rate. Source: CoinglassConsidering that most cryptocurrencies suffered considerable losses on Dec. 13, the overall market structure held nicely. Had there been excessive demand for shorts who were betting on a Bitcoin price drop below $46,000, the perpetual futures 8-hour funding would have gone below 0.05%.Tether trading at a 4% discount in the China-based markets, $300 million in long contract liquidations and a neutral funding rate is not a sign of a bear market. Unless these fundamentals change significantly, there is no reason to call for $42,000 or lower Bitcoin prices.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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2 key Bitcoin trading metrics suggest BTC price has bottomed

2 key Bitcoin trading metrics suggest BTC price has bottomed

Uverejnil používateľ | dec 12, 2021 |

Bitcoin (BTC) has been struggling to sustain the $47,500 support since the Dec. 4 crash, a movement that wiped out over $840 million in leveraged long futures contracts. The downside move came after the emergence of the Omicron variant of the Coronavirus and recent data showing U.S. inflation hitting a 40-year high. Bitcoin/USD price at FTX. Source: TradingViewWhile newcomers might have been scared by the 26% price correction over the past month, whales and avid investors like MicroStrategy added to their positions. On Dec. 9, MicroStrategy announced that they had acquired 1,434 Bitcoin, which increased their stake to 122,478 BTC.According to some analysts, the rationale behind Bitcoin’s weakness was the contagion fear that Evergrande, a leading Chinese property developer, defaulted on its US dollar debt on Dec. 9. The $1.1 Bitcoin billion options expiry on Dec. 10 also could have played an important factor because bears pocketed a $300 million profit.Margin traders are still extremely bullishMargin trading allows investors to leverage their positions by borrowing stablecoins and using the proceeds to buy more cryptocurrency. When those savvy traders borrow Bitcoin, they use the coins as collateral for shorts, meaning they are betting on a price decrease. That is why some analysts monitor the total lending amounts of Bitcoin and stablecoins to gain insight into whether investors are leaning bullish or bearish. Interestingly, Bitfinex margin traders slightly reduced their longs ahead of the Dec. 4 price crash. Bitfinex BTC margin long/total percentage. Source: CoinglassNotice that the indicator held a decent 90% favoring longs, meaning stablecoin borrowing was only 10% of the Bitfinex total. Furthermore, the margin longs recovered by 94% less than 24 hours after the price crash. This suggests that even if those investors were caught by surprise, most held their positions throughout the movement.To confirm whether this movement was specific to the instrument, one should also analyze options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The indicator will turn positive when “fear” is prevalent as the protective put options premium is higher than similar risk call options.The opposite holds when market makers are bullish, causing the 25% delta skew to shift to the negative area. Readings between negative 8% and positive 8% are usually deemed neutral.Deribit Bitcoin options 25% delta skew. Source: laevitas.chThe 25% delta skew ranged near 6% ahead of the Dec. 4 Bitcoin crash, which is considered neutral. Over the next 3 days the options market makers and whales displayed moderate fear as the indicator peaked at 10%, but currently it stands at 3%.The Bitfinex margin long metric and the options main risk metric show few signs of stress in derivatives markets. Considering that these markets are more often used by pro traders, one can begin to believe in the narrative that Bitcoin will claim a new all-time high in early 2022.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Data shows pro traders are currently more bullish on Ethereum than Bitcoin

Data shows pro traders are currently more bullish on Ethereum than Bitcoin

Uverejnil používateľ | dec 9, 2021 |

Most traders have noticed that Ether (ETH) price has seriously outperformed Bitcoin (BTC) for months now and the ETH/BTC ratio has rallied more than 230% in 2021 and recently hit a new high at 0.089 BTC on Dec. 9. ETH/BTC pair at Coinbase. Source: TradingViewTo put things in perspective, Ether’s $490 billion market capitalization currently represents 54% of Bitcoin’s $903 billion. This ratio finished 2020 at a mere 15%, so it is safe to conclude that some ‘flippening’ has occurred. It might still be far from what Ethereum-maximalists imagined, but it is still quite a respectable run.Instead of analyzing the rationale for the move or, even worse, predicting the outcome based on some loose expectations, analysts should explore the market structure of each coin individually. For example, is the futures’ market premium facing a similar trend on both coins and how does the pro traders’ long-to-short ratio compare? These are the most relevant metrics to determine whether a movement has the strength to continue.The futures premium favors EtherQuarterly futures are the whales and arbitrage desks’ preferred instruments but because of their settlement date and the price difference from spot markets, they might seem complicated for retail traders. However, these quarterly contracts’ most notable advantage is the lack of a fluctuating funding rate.These fixed-month instruments usually trade slightly above spot market prices, indicating that sellers are requesting more money to withhold settlement longer. Consequently, futures should trade at a 5% to 15% annualized premium in healthy markets. This situation is known as “contango” and is not exclusive to crypto markets.Bitcoin and Ether futures basis. Source: Laevitas.chAfter comparing both charts, we can see that Bitcoin futures trade at an average 2.6% annualized premium for March 2022 and 4.4% for June 2022. This compares to Ether’s 2.9% and 5%, respectively. As a result, it becomes clear that whales and arbitrage desks are demanding a larger premium on Ether and this is a bullish indicator.Bitcoin’s long-to-short ratio declinedTo effectively measure how professional traders are positioned, investors should monitor the top traders’ long-to-short ratio at leading crypto exchanges. This metric provides a broader view of traders’ effective net position by gathering data from multiple markets.It is worth noting that exchanges gather data on top traders differently because there are multiple ways to measure clients’ net exposure. Therefore, any comparison between different providers should be made on percentage changes instead of absolute numbers.Bitcoin top traders long-to-short ratio. Source: CoinglassThe long-to-short ratio for top Bitcoin traders currently stands at a 1.21 ratio average, down from the 1.39 on Dec. 5. Compared to the 1.59 figure from two weeks ago, this signals that buyers (longs) reduced their exposure by 24%. Once again, the absolute number has less importance than the overall change in the time frame.Ether top traders long-to-short ratio. Source: CoinglassMeanwhile, Ether whales and arbitrage desks showed a positive sentiment change from Dec. 5 after the long-to-short moved to 1.16 from 1.0. When comparing the average data from Nov. 25, top Ether traders’ long-to-short have been cut by 20% from 1.43.Data shows Ether traders are more confident than Bitcoin tradersCurrent derivatives data favors Ether because the asset currently shows a higher futures basis rate. Furthermore, the improvement on the top traders’ long-to-short since Oct. 5 signals confidence at a delicate period when ETH price is down 16% from its $4,870 all-time high.Bitcoin investors may be lacking confidence as its price stands 31% below the $69,000 all-time high on Nov. 10. There’s no way to know whether this is a cause or consequence. Still, judging by the futures premium and long-to-short data Ether seems to have enough momentum to keep outperforming.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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$1.1B in Bitcoin options expire on Friday, but data points to a sub-$55K BTC price

$1.1B in Bitcoin options expire on Friday, but data points to a sub-$55K BTC price

Uverejnil používateľ | dec 8, 2021 |

Bitcoin (BTC) bulls are still licking their wounds from the bloody Dec. 4 correction which saw the price collapse from $57,000 all the way to $42,000. This 26.5% downside move caused $850 million in long BTC futures contracts to be liquidated, but more importantly, it shifted the “Fear and Greed index” to its lowest level since July 21.Bitcoin/USD price at FTX. Source: TradingViewIt is somehow strange to compare both events, as the July 21 sub $30,000 low would have erased the entire gains in 2021. Meanwhile, the $42,000 low from Dec. 4 is still a 44% gain year-to-date. Compare this against the S&P 500 which is up 21% in 2021 and the WTI oil price which has accrued a 41% gain.Bulls might be focused on the Bitcoin reserves held at exchanges, which continues to descend and currently sits at the lowest level in 3 years. According to data from CryptoQuant, there are now less than 2.27 million BTC deposited at exchanges and having fewer coins available for trading signals that investors are unwilling to sell in the short term. This is a dynamic that many investors consider to be bullish.Even with the apparent balance between call (buy) and put (sell) options on Friday’s $1.1 billion expiry, bears are better positioned after Bitcoin stabilized slightly above $50,000.Bitcoin options aggregate open interest for Oct. 10. Source: CoinGlassA broader view using the call-to-put ratio shows a modest 7% advantage to Bitcoin bulls because the $555 million call (buy) instruments have a larger open interest versus the $520 million put (sell) options. However, the 1.07 indicator is deceptive because the 11.5% price drop over the past week caused most bullish bets to become worthless.For example, if Bitcoin’s price remains below $52,000 at 8:00 am UTC on Dec. 10, only $50 million worth of those call (buy) options will be available. That effect happens because there is no value in the right to buy Bitcoin at $55,000 if it is trading below such price.The numbers suggest that bulls are set for a major lossBelow are the three most likely scenarios based on the current price action. The number of option contracts available on Dec. 10 for bulls (call) and bear (put) instruments vary depending on the expiry BTC price. The imbalance favoring each side constitutes the theoretical profit:Between $47,000 and $50,000: 400 calls vs. 6,600 puts. The net result is $300 million favoring the put (bear) instruments.Between $50,000 and $54,000: 1,700 calls vs. 4,700 puts. The net result is $160 million favoring the put (bear) instruments.Above $54,000: 2,400 calls vs. 2,900 puts. The net result favors the put (bear) options by $30 million.This crude estimate considers the call options being used in bullish bets and the put options that are exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.For instance, a trader could have sold a call option, effectively gaining a negative exposure to Bitcoin above a specific price. But, unfortunately, there’s no easy way to estimate this effect.Bears will do their best to hold BTC below $50,000Bitcoin bears need a gentle push to sub-$50,000 to score a $300 million profit. On the other hand, bulls would need a 7.2% price recovery from the current $50,500 to reduce their loss by half.Considering the $2 billion liquidation of leverage long positions on Dec. 4, bulls are likely trying to stay afloat and will be unwilling to add more risk right now. It would be unnecessarily ineffective for bullish investors to waste their efforts trying to salvage this short-term loss. So in this instance, bears look set to maintain the upper hand in this weekly options expiry.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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Bitcoin and altcoins took a hit, but derivatives data reflects a calmer market

Bitcoin and altcoins took a hit, but derivatives data reflects a calmer market

Uverejnil používateľ | dec 6, 2021 |

Looking at the winners and losers of the past week clearly shows that traders endured some serious heat as the total crypto market capitalization dropped by 12.7% when Bitcoin fell to $41,000. This sharp downside move knocked the figure from $2.37 trillion to $1.92 trillion on Dec. 3 and a total of $2 billion long future contracts were liquidated.Top winners and losers from top 80 coins. Source: NomicsBitcoin (BTC) price retraced 14.6% over the past week, effectively underperforming the broader altcoin market. Part of this unusual movement can be explained by the performance seen in decentralized applications which held up better than most of the market. Data shows Ether (ETH) traded down 6.0%, Binance Coin (BNB) lost 7.3% and Solana (SOL) dropped by 7.8%.This week’s top gainers include OKEx’s OKB token (OKB) and Bitfinex’s UNUS (LEO). Perhaps these benefited from not having a United States entity because the regulatory uncertainties in the region continue to increase. Moreover, scaling solutions Polygon (MATIC) and Algorand (ALGO) benefited from Ethereum’s $40 or higher network transaction fees.Terra (LUNA) featured on last week’s top performers after its built-in token burn mechanism significantly reduced the supply. Meanwhile, Stacks (STX), previously known as Blockstacks, pumped after D’Cent wallet included support for SIP010 tokens.Sharing solutions had a disappointing weekAmong the worst performers were three decentralized sharing solutions: Theta Network (THETA), Filecoin (FILE), and Internet Computer (ICP). They were not alone, as some of the sectors’ altcoins below the top-80 also crashed. Siacoin (S.C.) endured a 34% drawdown and Ankr Network (ANKR) dropped by 31.8%. Chiliz (CHZ) suffered direct competition after Binance successfully launched an independent soccer fan token called SANTOS. Initially, Chiliz’ platform was created to host exclusive promos, services and voting for their fan tokens and more recently the project ventured into the non-fungible NFT market. However, that initiative also lost impact after soccer player Neymar launched a collection with NFTStar.Despite being among the bottom performers, decentralized exchange aggregator 1inch Network (1INCH) concluded a $175 million Series B investment round and these funds will be used to expand the protocol’s utility.Tether’s premium and the futures’ perpetual premium held up wellThe OKEx Tether (USDT) premium measures the difference between China-based peer-to-peer (P2P) trades and the official U.S. dollar currency, and in the past week it decreased slightly.OKEx USDT peer-to-peer premium vs. USD. Source: OKExCurrently the indicator has a 98% reading, which is slightly bearish, signaling weak demand from crypto traders to convert cash into stablecoins. Even at its best moment over the past two months, it failed to surpass 99%, so Chinese players have not been excited about the general market.The overall impact of last week’s correction was a drop in the total futures open interest, down 28% to $16.7 billion. Nevertheless, the move was expected since the total market cap retraced and some $3.9 billion worth of liquidations took place during the week.More importantly, the funding rates on Bitcoin and Ethereum futures quickly recovered from Dec. 3 price crash. Even though longs (buyers) and shorts (sellers) are matched at all times in any futures contract, their leverage varies.Consequently, to balance their risk, exchanges will charge a funding rate to whichever side is using more leverage and this fee is paid to the opposing side.BTC and ETH perpetual futures 8-hour funding rates. Source: Coinglass.comData reveals that a modest bearish trend occurred on Dec. 3 and 4 as the 8-hour funding rate went below zero. A negative funding rate shows that shorts (seller) were the ones paying the fees, but the movement faded as soon as BTC and ETH prices bounced 15% from their lows.The above data might not sound encouraging, but considering that Bitcoin suffered considerable losses this week, the overall market structure held nicely. If the situation was worse, one would definitively not expect a 99% Tether premium or a positive perpetual funding rate.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

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