Značka: Deribit

Bears target new lows for Ethereum as Friday’s $1.1B options expiry approaches

Ether (ETH) price tumbled below the $3,000 support on Jan. 21 as regulatory uncertainty continues to weigh down the sector and rumors that the United States Securities and Exchange Commission is reviewing DeFi’s high-yield crypto lending products continue to circulate. On Jan. 27, the Russian Finance Ministry submitted a crypto regulatory framework for review. The proposal suggests that crypto operations are carried out within the traditional banking infrastructure and that mechanisms to identify traders’ personal data are included.Further bearish news came as Ryan Korner, a top special agent from the United States Internal Revenue Service (IRS) Criminal Investigation’s Los Angeles field office, issued negative remarks during a virtual event hosted by the USC Gould School of Law. According to Ryan, crypto is the “future,” but ”fraud and manipulation are still rampant in the space.”Ether bulls are trying to determine whether the Jan. 24 drop to $2,140 was the final bottom for the current downtrend. This 47.5% correction in 30 days caused an aggregate of $1.58 billion in long futures contracts to be liquidated.Ether/USD price at FTX. Source: TradingViewNotice how Ether’s price has been downtrending for 75 days, respecting a channel that currently holds $2,200 as a support level. On the other hand, a 19% price increase from the current $2,500 to the $3,000 resistance would not necessarily mean a trend reversal.Curiously, call (buy) option instruments vastly dominate Friday’s $1.1 billion expiry, but bears are better positioned after Ether price stabilized below $3,000.Ether options aggregate open interest for Jan. 28 expiry. Source: CoinGlassA broader view using the call-to-put ratio shows an 82% advantage to Ether bulls because the $680 million call (buy) instruments have a larger open interest versus the $410 million put (sell) options. However, the 1.82 call-to-put indicator is deceptive because the price drop below $3,000 caused most bullish bets to become worthless.For example, if Ether’s price remains below $2,500 at 8:00 am UTC on Jan. 28, only $57 million worth of those call (buy) options will be available. That effect happens because there is no value in the right to buy Ether at $2,500 if it is trading below this level.Data suggests bulls are set for a significative lossBelow are the three most likely scenarios based on the current price action. The number of options contracts available on Friday for bulls (call) and bear (put) instruments vary depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit:Between $2,200 and $2,400: 3,200 calls vs. 121,500 puts. The net result is $270 million favoring the put (bear) instruments.Between $2,400 and $2,700: 19,500 calls vs. 95,500 puts. The net result favors bears by $190 million.Between $2,700 and $2,900: 34,700 calls vs. 73,400 puts. The net result favors the put (bear) options by $110 million.This crude estimate considers the call options used in bullish bets and the put options 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 Ether above a specific price. But unfortunately, there’s no easy way to estimate this effect.Bears will try to hold ETH below $2,400Ether bears need a gentle push below $2,400 to score a $270 million profit on Friday. On the other hand, bulls would need an 8.4% price recovery from the current $2,500 to reduce their loss by 58%.Considering the bearish regulatory newsflow, Ether bulls are unlikely willing to add more risk right now. Therefore, bulls should concentrate their efforts to partially salvage this defeat by keeping Ether price above $2,500, resulting in a $170 million loss.January seems to have given Ether bears the upper hand in keeping the pressure on the price in the short term.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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Derivatives data suggests that Bitcoin’s $39K bounce was a mere blip

Bitcoin (BTC) bulls are probably quite disappointed with how the start of 2022 has shaped up, especially since the cryptocurrency plunged over 20% in the first 25 days of the year. Even more shocking is the fact that the supposed $32,930 bottom on Jan. 21 was the lowest level BTC price had seen in six months, while equity markets as measured by the S&P500 reached an all-time high on Jan. 4. The sell-off in risk markets accelerated after the U.S. Federal Reserve announced its plan to raise interest rates in the coming months, a measure intended to hold back the escalating inflation. For example, Invesco China Technology ETF (CQQQ) traded below $58 on Jan. 22, which was a 20% drop from its peak on Nov. 12.Regulatory uncertainties continue to weigh on the sector as United States Congressman Patrick McHenry called the “inconsistent treatment and jurisdictional uncertainty” on crypto as a problem. McHenry essentially suggested that Congress should take crypto regulation away from executive agencies and courts.Bitcoin price recovered, but bulls are still in troubled watersBitcoin bulls have little to celebrate after the 12% partial recovery to $38,100 on Jan. 26. First, BTC price is down 35% over the past two months, and more importantly, if Bitcoin trades below $38,000 by the Jan. 28 monthly options expiry bears are set to profit by $350 million.Bitcoin options aggregate open interest for Jan. 28. Source: CoinglassAt first sight, the $1.52 billion call (buy) options overshadow the $760 million in put options, but the 1.96 call-to-put ratio is deceptive because the recent price drop will likely wipe out most of the bullish bets.For example, if Bitcoin’s price remains below $38,000 at 8:00 am UTC on Jan. 28, only $72 million worth of those call (buy) options will be available at the expiry. There is no value in the right to buy Bitcoin at $38,000 if BTC is trading below that price.Bears bag a $315 million profit even with Bitcoin near $39,000Here are the three most likely scenarios for the $2.3 billion options expiry on Jan. 14. The imbalance favoring each side represents the theoretical profit. In practice, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:Between $35,000 and $37,000: 660 calls vs. 13,550 puts. The net result is $450 million favoring the put (bear) options.Between $37,000 and $39,000: 1,300 calls vs. 13,100 puts. The net result is $315 million favoring the put (bear) options.Between $39,000 and $41,000: 3,710 calls vs. 8,170 puts. The net result favors bears by $180 million.This crude estimate considers call options being used in bullish bets and put options exclusively in neutral-to-bearish trades. However, 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.$40,000 is still a stretchIt might seem relatively easy to move Bitcoin price up by 3% and bring the expiry price above $39,000 on Friday’s expiry. However, considering the negative news flow regarding regulation and monetary policy tightening, bulls will likely have a hard time pulling it off.Therefore, if the current short-term negative sentiment prevails, bears could easily pressure the price down 3% from the current $38,100 down to $36,900 and secure a $450 million profit. In short, bears completely dominate Jan. 28 monthly options expiry, giving little hope for a $40,000 price recovery in the short-term.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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Is the bottom in? Data shows Bitcoin derivatives entering the ‘capitulation’ zone

Analysts love to issue price predictions and it seems that nine out of 10 times they are wrong. For example, how many times did analysts say “we will never see Bitcoin back at X price again,” only to see it plunge well below that level a few months later? It doesn’t matter how experienced a person is or how connected in the industry. Bitcoin’s (BTC) 55% volatility must be taken seriously and the impact this has on altcoins is usually stronger during capitulation-like movements.I was undeniably wrong about how much crypto could fall from macro contagion. I remain bullish on the space as a whole and think it is the most important mega-trend of our times.I joined CT during 2018 and I will be here with you guys in the coming yrs, bull or bear.— Zhu Su (@zhusu) January 24, 2022For those unfamiliar with the case, on Dec. 7, Zhu Su’s Three Arrows Capital acquired $676.4 million worth of Ether (ETH) after its price collapsed 20% over 48 hours. Zhu went as far as saying that he would continue to buy “any panic dump,” despite acknowledging that Ethereum fees were unsuitable for most users.To understand whether there is still an appetite for bearish bets and how pro traders are positioned, let’s take a look at Bitcoin’s futures and options market data.Futures traders are unwilling to shortThe basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets and this price gap is caused by sellers demanding more money to withhold settlement longer.On the other hand, a red alert emerges whenever this indicator fades or turns negative, a scenario known as “backwardation.”Bitcoin 3-month futures basis rate. Source: Laevitas.chNotice how the indicator held the 5% threshold despite the 52% price correction in 75 days. Had pro traders effectively entered bearish positions, the basis rate would have flipped closer to zero or even negative. Thus, data shows a lack of appetite for short positions during this current corrective phase.Options traders are still in the “fear” zoneTo exclude externalities specific to the futures instrument, traders should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options.The opposite holds when greed is prevalent, causing the 25% delta skew indicator to shift to the negative area. Bitcoin 30-day options 25% delta skew. Source: Laevitas.chThe 25% skew indicator flipped to the “fear” area as it moved above 10% on Jan. 21. That 17% peak level was last seen in early July 2021, and curiously, Bitcoin was trading at $34,000 back then.This indicator might be interpreted as bearish when considering that arbitrage desks and market makers are overcharging for downside protection. Still, this metric is backward-looking and usually predicts market bottoms. For example, just two weeks after the skew indicator peaked at 17% on July 5, Bitcoin price bottomed at $29,300.Correlation with traditional markets is not so relevantIt is worth noting that Bitcoin has been on a downtrend for the past 75 days, and this is before the Federal Reserve’s tightening discourse on Dec. 15. Moreover, the increased correlation with traditional markets does not explain why the S&P 500 index peaked on Jan. 4, while Bitcoin was already down 33% from the $69,000 all-time high.Considering the lack of bears’ appetite to short BTC below $40,000 and options traders finally capitulating, Bitcoin shows little room for the downside. Furthermore, Bitcoin futures liquidation over the past week totalled $2.35 billion, which significantly reduced buyers’ leverage. Of course, there are no guarantees that $32,930 was the final bottom, but short sellers will likely wait for a bounce before entering bearish positions.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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Bulls aim to turn the tide in Friday’s $580M options expiry after BTC tops $43K

Bitcoin (BTC) investors seem uncomfortable with adding positions after the most recent 40% correction from the $69,000 all-time high made on Nov. 10. In addition to the prolonged downtrend, remarks from the United States Federal Reserve on Dec. 15 about rising interest rates are also weighing on risk-on assets.The Fed signaled that it could raise its benchmark rate three times this year and there are plans to increase the pace of its asset purchasing taper. Consequently, traders are worried that these plans will negatively impact traditional and crypto markets because liquidity will no longer be “easily” available.Bitcoin price at Coinbase, USD (right) vs. China stock market MSCI index (left)Cryptoasset regulation in the U.S. has been in the spotlight and recently a member of the Securities and Exchange Commission’s Investor Advisory Committee called for the agency to open public comments regarding digital asset regulation. On Jan. 18, associate law professor J.W. Verret addressed the petition to SEC Secretary Vanessa Countryman and according to Verret, the current path the SEC is taking seems not to recognize that digital assets do not fit within the regulatory framework designed for equity investments. The professor also questioned the requirements the SEC would consider in approving a Bitcoin spot exchange-traded fund.$590 million in options expire on Jan. 21Even though Bitcoin is said to be correlated to traditional markets, BTC derivatives traders were not expecting sub-$44,000 prices, according to the Jan. 21 options expiry. Friday’s $590 million open interest will allow bears to score up to $82 million if BTC trades below $41,000 during the expiry.Bitcoin options aggregate open interest for Jan. 21. Source: Coinglass.comAt first sight, the $380 million call (buy) options vastly surpass the $210 million put (sell) instruments, but the 1.81 call-to-put ratio is deceptive because the recent price drop will likely wipe out most of the bullish bets.There is no value in the right to buy Bitcoin at $44,000 if it is trading below that price. Therefore, if Bitcoin remains below $44,000 at 8:00 am UTC on Jan. 21, only $64 million of those call (buy) options will be available at the expiry. Bears are comfortable with Bitcoin price below $42,000Here are the four most likely scenarios for Jan. 21’s $590 million options expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the active quantity of call (buy) and put (sell) contracts varies:Between $40,000 and $41,000: 30 calls vs. 3,320 puts. The net result is $132 million favoring the put (bear) options.Between $41,000 and $42,000: 170 calls vs. 2,180 puts. The net result is $82 million favoring the put (bear) instruments.Between $42,000 and $44,000: 1,480 calls vs. 1,130 puts. The net result is balanced between call and put options.Between $44,000 and $45,000: 2,980 calls vs. 630 puts. The net result favors call (bull) instruments by $103 million.This crude estimate considers put options being used in bearish bets and call options exclusively in neutral-to-bullish trades. However, this oversimplification disregards more complex investment strategies.Bulls need $44,000 to bag a $103 million profitRegulatory uncertainty and Federal Reserve monetary policies might be reasons for the recent market weakness, but a mere 5% price pump from the current $42,000 level is enough for Bitcoin bulls to profit $103 million on Jan. 21’s expiry.However, if the current short-term negative sentiment prevails, bears could easily pressure the price below $41,000 and pocket $132 million gains.Currently, options markets data slightly favor the put (sell) options, but the outcome is yet to be seen.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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Ethereum options data shows pro traders expect strong resistance at $3,600

Ether (ETH) price has bounced 13% from its Jan. 9 low at $2,950, but it seems premature to call the move a cycle bottom. Instead, the larger bearish movement has prevailed and although it looks primarily correlated to Bitcoin (BTC) price, regulatory concerns and a tighter United States Federal Reserve policy have also been blamed for the movement.BTC and Ether have been under pressure since regulators focused their attention on stablecoins. On Nov. 1, the U.S. Treasury Department urged Congress to ensure that stablecoin issuers are regulated similarly to U.S. banks. ETH/USD price at FTX. Source: TradingViewCurrently, the descending channel formation initiated in mid-November shows resistance at $3,850 resistance. The average network transaction fees have also risen back above $50 and the longer that the Ethereum 2.0 upgrade takes to occur, the better the situation will be for competing chains.Regardless of the rationale behind Ether’s 28% price drop over the past six weeks, bulls missed the opportunity to secure a $300 million profit in the Jan. 14 weekly options expiry. Unfortunately for them, this $4,500 and higher scenario seems unfeasible at the moment.Ether options aggregate open interest for Jan. 14. Source: Coinglass.comThe call-to-put ratio shows an 89% advantage for bulls because the $380 million call (buy) instruments have a larger open interest versus the $200 million put (sell) options. The current 1.89 measure is deceptive because the recent Ether price drop caused most of the bullish bets to become worthless.For example, if Ether’s price remains below $3,300 at 8:00 am UTC on Jan. 14, only $24 million worth of these call (buy) options will be available, but there is no value in having the right to buy Ether at $3,300 if it is trading below that price.Related: Cointelegraph Consulting – A look at Terra’s ecosystemBears need ETH price below $3,300 to secure a $65 million profitBelow are the three most likely scenarios based on the current price action. The number of option contracts available on Jan. 14 for bulls (call) and bear (put) instruments vary depending on the expiry ETH price. The imbalance favoring each side constitutes the theoretical profit:Between $3,100 and $3,300: 7,400 calls vs. 27,800 puts. The net result favors bears by $65 million.Between $3,300 and $3,500: 22,200 calls vs. 19,300 puts. The net result is balanced between bulls and bears.Above $3,500: 32,500 calls vs. 15,600 puts. The net result is $60 million favoring the call (bull) instruments.This crude estimate considers call options being used in bullish bets and put options exclusively in neutral-to-bearish trades. Even so, this oversimplification disregards more complex investment strategies.For instance, a trader could have sold a put option, effectively gaining a positive exposure to Ether above a specific price. But, unfortunately, there’s no easy way to estimate this effect.Bulls don’t stand a chanceEther bulls would have had a decent $300 million advantage if the price held above $4,500. However, the current scenario requires a 6% positive move from $3,300 to $3,500 to generate a $60 million advantage. Considering there are less than 12 hours until Friday’s options expiry, bulls will likely concentrate their efforts on keeping the price above $3,300 to balance out the scales. 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 Bitcoin traders’ neutral view ahead of Friday’s $750M BTC options expiry

Bitcoin (BTC) has bounced 11% from the $39,650 low hit on Jan. 10 and, currently, the price is battling with the $44,000 level. There are multiple explanations for the recent weakness, but none of them seem sufficient enough to justify the 42% correction that took place since the Nov. 10 all-time high at $69,000.At the time (Nov. 12), negative remarks from the U.S. Securities and Exchange Commission (SEC) were issued at the rejection of VanEck’s physical Bitcoin exchange-traded fund (ETF). The regulatory body cited the inability to avoid market manipulation due to unregulated exchanges and heavy trading volume based on Tether’s (USDT) stablecoin.Then, on Dec. 17, the U.S. Financial Stability Oversight Council recommended that state and federal regulators review regulations and the tools that could be applied to digital assets. On Jan. 5, BTC price corrected again after the Federal Reserve’s December Federal Open Market Committee (FOMC) session, which confirmed plans to ease debt buyback and likely increase interest rates.Regarding derivatives markets, if Bitcoin price trades below $42,000 by the Jan. 14 expiry, bears will have a $75 million net profit on their BTC options.Bitcoin options aggregate open interest for Jan. 14. Source: CoinglassAt first sight, the $455 million call (buy) options are overshadowing the $295 million puts, but the 1.56 call-to-put ratio is deceptive because the 14% price drop over the last three weeks will likely wipe out most of the bullish bets.If Bitcoin’s price remains below $44,000 at 8:00 am UTC on Jan. 14, only $44 million worth of those call (buy) options will be available at the expiry. There is no value in the right to buy Bitcoin at $44,000 if BTC is trading below that price.Bears might bag a $75 million profit if BTC is below $42,000Here are the four most likely scenarios for the $750 million options expiry on Jan. 14. The imbalance favoring each side represents the theoretical profit. In practice, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:Between $40,000 and $43,000: 480 calls vs. 2,220 puts. The net result is $75 million favoring the put (bear) options.Between $43,000 and $44,000: 1,390 calls vs. 1,130 puts. The net result is balanced between call and put options.Between $44,000 and $46,000: 1,760 calls vs. 660 puts. The net result is $50 million favoring the call (bull) options.Between $46,000 and $47,000: 1,220 calls vs. 520 puts. The net result is $125 million favoring the call (bull) options.This crude estimate considers put options being used in neutral-to-bearish bets and call options exclusively in bullish trades. However, this oversimplification disregards more complex investment strategies.For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin above a specific price. But, unfortunately, there’s no easy way to estimate this effect.Related: Traders say Bitcoin run to $44K may be a relief bounce, citing a repeat of December’s ‘nuke’ Bulls need $46,000 for a decent winThe only way bulls can score a significant gain on the Jan. 14 expiry is by sustaining Bitcoin’s price above $46,000. However, if the current short-term negative sentiment prevails, bears could easily pressure the price down 4% from the current $43,800 and raise the profit by up to $75 million if Bitcoin price stays below $42,000.Currently, options markets seem balanced, giving bulls and bears equal odds for Friday’s 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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Ethereum futures and options data reflects traders’ mixed emotions on $3.2K ETH price

Ether (ETH) has been an emotional rollercoaster over the past three months primarily because its price rallied twice. First, it peaked at $4,870 on Nov. 10 and at $4,780 on Dec. 1. However, the double top was quickly followed by a harsh rejection, which led to $490 million in long futures contract liquidations in 48 hours.Once again, hope was instilled on Dec. 8 after Ether commenced to rally 28.5% in four days to retest the $4,400 support. Soon after, the downtrend continued, leading to the $2,900 bottom on Jan. 10, which was the lowest ETH price seen in 102 days. This low marked a 40% low from the $4,870 all-time high and caused traders to question whether a bear market had been set.Ether/USD price at FTX. Source: TradingViewOne might argue that Ether is simply following Bitcoin’s 42% correction from the Nov. 10 all-time high at $69,000 and the most recent pullback has partially been attributed to the United States Federal Reserve’s potential tighter monetary policies and Kazakhstan’s political turmoil impact on mining.This simplistic analysis leaves behind some crucial developments, such as China’s official digital yuan wallet becoming the most downloaded app in local mobile app stores on Jan. 10. Furthermore, a pilot version of the nation’s central bank digital currency (CBDC) is being used in select cities and it also became available for download on app stores on Jan. 4.Even with the fiscal policy pressure and negatively skewed price action, traders should still monitor the futures contracts premium (basis rate) to analyze how bullish or bearish professional traders are.Futures traders are becoming more anxiousThe basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets. This price gap is caused by sellers demanding more money to withhold settlement longer.However, a red alert emerges whenever this indicator fades or turns negative, a scenario known as “backwardation.”Ether 3-month futures basis rate. Source: Laevitas.chNotice how the indicator peaked at 20% on Nov. 8 as Ether surpassed $4,800, but then gradually faded away to an 8% low on Dec. 5 after ETH flash crashed to $3,480. More recently as Ether touched a $2,900 low on Jan. 10, the basis rate moved to 7%, which is its lowest level in 132 days.Consequently, professional Ether traders are not comfortable despite the 10% recovery to $3,200 on Jan. 11.Options traders recently flipped neutralTo exclude externalities specific to the futures instrument, one should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options.The opposite holds when greed is the prevalent mood causing the 25% delta skew indicator to shift to the negative area.Ether 30-day options 25% delta skew. Source: TradingViewWhen market makers and whales are bearish, the 25% delta skew indicator shifts to the positive area, and readings between negative 8% and positive 8% are usually deemed neutral.Related: World’s biggest podcaster, Joe Rogan, has a ‘lot of hope’ for cryptoEther option traders entered “fear” mode on Jan. 8 as the 25% delta skew surpassed the 8% threshold, peaking at 11% two days later. However, the quick bounce from the $2,900 low instilled confidence in Ether options traders and also moved the options “fear and greed” metric to a meager 3%.At the moment, there is not a consensus sentiment-wise from Ether traders because futures markets indicate slight discontent and options arbitrage desks and whales have recently abandoned their bearish stance. This makes sense because the current $3,200 price is still reflecting the recent 15% weekly drop and is far from exciting.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 price bounces to $41.5K, but derivatives data shows traders lack confidence

Bitcoin (BTC) briefly reached its lowest level in five months this Monday at $39,650, marking a 42.6% drawdown from the all-time high present on Nov 22, 2022. Some argue that a “crypto winter” has already begun citing the $2.1 billion leverage-long aggregate crypto futures contracts that were liquidated over the past seven days.Bitcoin/USD price at FTX. Source: TradingViewThe descending channel guiding Bitcoin’s negative performance for the past 63 days indicates that traders should expect sub-$40,000 prices by February.Confidence from investors continued to decline after the United States Federal Reserve’s December FOMC session on Jan. 5. The monetary policy authority showed commitment to decrease its balance sheet and increase interest rates in 2022.On Jan. 5, Kazakhstan’s political turmoil added further pressure to the markets. The country’s internet was shut down amid protests and this caused Bitcoin’s network hashrate to tumble 13.4%. Futures traders are still neutralTo analyze how bullish or bearish professional traders are, one should monitor the futures premium , which is also known as the “basis rate.”The indicator measures the difference between longer-term futures contracts and current market levels. A 5% to 15% annualized premium is expected in healthy markets, which is a situation known as contango.This price gap is caused by sellers demanding more money to withhold settlement longer and a red alert emerges whenever this indicator fades or turns negative, which is a scenario known as “backwardation.”Bitcoin 3-month future contracts basis rate. Source: Laevitas.chNotice how the futures market premium did not trade below 7% over the past couple of months. This is an excellent indicator considering the absence of Bitcoin price strength during this period.Options traders are not as bullishTo exclude externalities specific to the futures instrument, one should also analyze the options markets.The 25% delta skew compares similar call (buy) and put (sell) options. This metric will turn positive when fear is prevalent because the protective put options premium is higher than similar risk call options.The opposite holds when greed is the prevalent mood which causes the 25% delta skew indicator to shift to the negative area.Deribit Bitcoin options 25% delta skew. Source: laevitas.chReadings between negative 8% and positive 8% are usually deemed neutral. The last time the 25% delta skew indicator entered the “fear” range at 10% was on Dec 6, 2022.Related: Bitcoin drops below $40K for first time in 3 months as fear set to ‘accelerate’Thus, options markets’ traders are at the very edge of the neutral-to-bearish sentiment because the indicator currently stands at 8%. Moreover, buying protective put options is becoming more expensive, so market markers and arbitrage desks are not confident that $39,650 was the bottom.Overall, the sentiment is pessimistic and the $2.1 billion in aggregate futures contracts liquidations signal that derivatives traders’ longs (buyers) are quickly losing confidence. Only time will tell where the exact bottom is, but presently, there is not an indication of strong support coming from pro traders.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's $6.1 billion options expiry was not enough to break the bearish sentiment

Bitcoin’s (BTC) price has been ranging between $46,000 and $52,000 for 26 days. Despite the large nominal $6.1 billion year-end options expiry, the bullish and bearish instruments were evenly balanced between $44,000 and $49,000.Therefore, it was no surprise that the $47,175 price at 8:00 am UTC on Dec. 31 brought little change to the price structure. Even the 3% rally to $48,500 following the event failed to sustain itself, signaling that bears are unwilling to cede their upper hand.Bitcoin/USD price on Coinbase. Source: TradingViewBulls might have interpreted the 9,925 BTC leaving Coinbase in 24 hours as a positive trigger, considering fewer coins are available on exchanges for newcomers. Besides, the first week of the year has been positive for the past four years, averaging 18.5% gains for Bitcoin holders.To further support bulls’ thesis, the United States listed tech company MicroStrategy added another 1,914 BTC to their balance sheet on Dec. 30. On the negative side, regulation continues to pressure the markets as South Korean exchanges require users to verify their third-party wallet addresses to comply with the Financial Action Task Force (FATF) travel rule guidelines.Bitcoin had a stellar 2021 anywayRegardless of the short-term bearishness behind December’s 16% price drop, Bitcoin continues to vastly outperform both U.S. stocks and gold for the third year in a row. Yet, that performance was not enough to avoid every $48,000 and higher call (buy) option instrument becoming worthless as the Dec. 31 expiry price came in lower.Bitcoin options aggregate open interest for Dec. 31. Source: Coinglass.comAt first sight, the $4.0 billion call (buy) options vastly outperformed the $2.1 billion put (sell) instruments, but the 1.9 call-to-put ratio is deceptive because the 16% price drop from Nov.’s $57,000 close wiped out most of the bullish bets. Therefore, there is no value in the right to buy Bitcoin (call option) at $50,000 if it is trading below that price.Bulls and bears instruments were evenly marched for the Dec. 31 Bitcoin options expiry, which came in much smaller than expected at $660 million. Yet, bears were unable to take control as 85% of their bets have been placed at $47,000 or below. Such data partially explains why the Dec. 31 expiry was followed by an attempt from bulls to regain momentum.Will the first week of 2022 finally be able to revert the slightly negative sentiment that has prevailed since the Dec. 3 crash? Unfortunately, according to Bitcoin options markets, there is no indication that the tide has changed.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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Here's why Ethereum traders could care less about ETH's current weakness

Since hitting an all-time high at $4,870 on Nov. 10, Ether (ETH) price has been posting lower lows over the past 50 days. If this downtrend continues, the lower trendline support suggests that the altcoin will bottom at $3,600. Still, derivatives data is signaling that pro traders are not concerned about the seemingly bearish market structure.Ether/USD price on FTX. Source: TradingViewNotice how the price peaks are getting lower on the 12-hour time frame as mounting regulatory concerns drive investors away from the sector. In a press conference on Dec. 17, Russia’s Central Bank governor, Elvira Nabiullina, stated that banning crypto in the country is “quite doable.”Nabiullina cited crypto’s frequent use for illegal operations and significant risks for retail investors. Russian President Vladimir Putin also recently criticized cryptocurrency by saying they are not backed by anything. Interestingly, the country plans to launch its own central bank digital currency even as the Russian ruble lost 44% against gold over the past four years.In the United States, a bipartisan group of U.S. senators has called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill relating to the crypto tax reporting requirements. Under the current broader “broker” definition, miners, software developers, transaction validators and node operators will likely be required to report digital asset transactions worth more than $10,000 to the Internal Revenue Service.Even with the regulatory uncertainty and negatively skewed price action, traders should monitor the futures contracts premium — also known as the “basis rate” — to analyze how bullish or bearish professional traders are.Pro traders are neutral despite the price weaknessThe basis indicator measures the difference between longer-term futures contracts and the current spot market levels. A 5% to 15% annualized premium is expected in healthy markets. This price gap is caused by sellers demanding more money to withhold settlement longer.However, a red alert emerges whenever this indicator fades or turns negative, also known as “backwardation.”Ether 3-month futures basis rate. Source: Laevitas.chNotice how the sharp decrease after the 24% intraday crash on Dec. 3 caused the annualized futures premium to reach its lowest level in two months. After the initial panic, the Ether futures market recovered to the current 9% level, which is close to the middle of the “neutral” range.To confirm whether this movement was specific to that instrument, traders should also analyze the options markets. The 25% delta skew compares similar call (buy) and put (sell) options. The indicator will turn positive when “fear” is prevalent because the protective put options premium is higher than similar risk call options.When market makers are bullish, the 25% delta skew indicator shifts to the negative area, and readings between negative 8% and positive 8% are usually deemed neutral.Ether 30-day options 25% delta skew. Source: Laevitas.chRelated: Senate hearing on stablecoins: Compliance anxiety and Republican pushbackFor the past three weeks, the 25% delta skew ranged between a positive 3 and 8 which is in the neutral zone. Consequently, options market data validate the sentiment seen in futures markets and signals that whales and market makers are not worried about the recent price weakness.If investors “zoom-out” a bit, they will see that Ether’s year-to-date gains are at 300%, and this explains why pro traders are not worried about a 20% drop from the $4,870 all-time high.Furthermore, the Ethereum network’s total value locked in smart contracts doubled over the past six months to $148 billion. This data gives derivatives traders the confidence needed to remain calm even with the current short-term price weakness.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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Markets rally after FOMC meeting, but Bitcoin bears still have a short-term advantage

Bitcoin’s (BTC) price has been in a down-trend since the $69,000 all-time high on Nov. 10, when the the Labor report showed inflation pushing above 6.2% in the United States. While this news could be beneficial for non-inflationary assets, the VanEck physical Bitcoin exchange-traded fund (ETF) denial by the U.S. Securities and Exchange Commission (SEC) on Nov. 12 threw some investors off-guard.Bitcoin/USD price on Coinbase. Source: TradingViewWhile the ETF request denial was generally expected, the reasons given by the regulator may be worrisome for some investors. The U.S. SEC cited the inability to avoid market manipulation on the broader Bitcoin market due to unregulated exchanges and heavy trading volume based on Tether’s (USDT) stablecoin.Analyzing the broader market structure is extremely relevant, especially considering that investors closely monitor meetings held by the U.S. Federal Reserve. Regardless of the magnitude of the upcoming tapering in the Fed’s bond and assets repurchase program, Bitcoin’s movements have been tracking the U.S. Treasury yields over the past 12 months.Bitcoin/USD at FTX (orange, left) vs. U.S. 10-year Treasury Yields (blue, right). Source: TradingViewThis tight correlation shows how decisive the Federal Reserve’s monetary policy has been with riskier assets, including Bitcoin. Moreover, the yield decline over the past three weeks from 1.64 to 1.43 partially explains the weakness seen in the crypto market.Obviously, there are cother factors in play, for example, the market pullback on Nov. 26 was primarily based on concerns over the new COVID-19 variant. Regarding derivatives markets, a Bitcoin price below $48,000 gives bears complete control over Friday’s $755 million BTC options expiry.Bitcoin options aggregate open interest for Dec. 17. Source: Coinglass.comAt first sight, the $470 million call (buy) options overshadow the $285 million put (sell) instruments, but the 1.64 call-to-put ratio is deceptive because the 14% price drop since Nov. 30 will likely wipe out most of the bullish bets.If Bitcoin’s price remains below $49,000 at 8:00 am UTC on Dec. 17, only $28 million worth of those call (buy) options will be available at the expiry. In short, there is no value in the right to buy Bitcoin at $49,000 if it is trading below that price.Bears are comfortable with Bitcoin below $57,000Here are the three most likely scenarios for the $755 million Friday’s options expiry. The imbalance favoring each side represents the theoretical profit. In other words, depending on the expiry price, the quantity of call (buy) and put (sell) contracts becoming active varies:Between $45,000 and $47,000: 110 calls vs. 2,400 puts. The net result is $105 million favoring the put (bear) options.Between $47,000 and $48,000: 280 calls vs. 1,900 puts. The net result is $75 million favoring the put (bear) instruments.Between $48,000 and $50,000: 1,190 calls vs. 1,130 puts. The net result is balanced between call and put options.This crude estimate considers call options being used in bullish bets and put options exclusively in neutral-to-bearish trades. However, this oversimplification disregards more complex investment strategies.For instance, a trader could have sold a put option, effectively gaining a positive exposure to Bitcoin (BTC) above a specific price. But, unfortunately, there’s no easy way to estimate this effect.Bulls need $48,000 or higher to balance the scalesThe only way for bulls to avoid a significant loss in the Dec. 17 expiry is by sustaining Bitcoin’s price above $48,000. However, if the current short-term negative sentiment prevails, bears could easily pressure the price down 4% from the current $48,500 and profit up to $105 million if Bitcoin price stays below $47,000.Currently, options markets data slightly favor the put (sell) options, thus creating opportunities for additional negative pressure.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

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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