Bitcoin
BTC$41 576.95

5.30%

Ethereum
ETH$2 235.52

3.52%

Tether
USDT$1.000270

0%

Binance Coin
BNB$228.99

0.40%

XRP
XRP$0.619161

-1.50%

Solana
SOL$61.81

-2.64%

Bears scattered as Bitcoin hit $40K, but pro traders remain cautious


29 Jul 2021

#Bitcoin

Bitcoin's rally to $40,000 alleviated some of the bearish sentiment in the market, but data shows derivatives traders still walking on eggshells. Bitcoin (BTC) traders might be feeling extra euphoric after the recent 35% rally, but data suggests bears are not too worried because a similar breakout took place in mid-July and the price failed to hold the $40,000 support. To understand how bullish investors are this time around, let's take apart the derivatives data and look at the futures contracts premium and options skew. Typically, these indicators reveal how professional traders are pricing the odds of a potential retrace to $36,000.

Even though the pattern isn't exactly similar, Bitcoin crashed to $31,000 on June 8 and bounced to $41,000 six days later. The 32% rally caused $1.4 billion BTC short contracts liquidation that spread over the week. Bears were clearly not expecting this move, but in less than three days, Bitcoin was trading below $38,000 and initiated a downtrend.

Therefore, bulls have reasons to doubt the current rally's sustainability, considering there haven't been any significant changes to justify the $40,000 level. Moreover, the price could be suppressed by the ongoing FUD regarding miners' exodus from China and Binance moving to seek regulatory approval.

The futures premium has not shown a significant recovery

One of the best measures of professional traders' optimism is the futures market's premium because it measures the gap between monthly contracts and the current spot market levels. In healthy markets, a 5% to 15% annualized premium is expected. However, a backwardation scenario occurs during bearish markets, and the indicator fades or turns negative.

According to the chart above, the one-month futures contract has been unable to recover an annualized premium above 5%. Some periods of backwardation happened over the last month, although the current level is deemed neutral. To exclude externalities specific to the futures' instrument, one should also analyze options markets.

Whenever market makers and professional traders lean bullish, they will demand a higher premium on call options. Such a trend will cause a negative 25% delta skew indicator. On the other hand, whenever the downside protection is more costly, the skew indicator will become positive.

"Fear" is out of the picture, but neutrality defines the current market

When the figure oscillates between negative 10% and positive 10%, the indicator is deemed neutral. The 25% delta skew indicator had been signaling 'fear' between May 14 and July 24. However, even the recent rally to $40,000 wasn't enough to flip the sentiment towards 'greed,' as the indicator remains neutral at negative 4%.

According to both derivatives metrics, there is absolutely no sign of bullishness from professional traders. The 35% price hike might have eliminated a recent pattern of fear, but it was not enough to flip the sentiment.


Related

NordFX Copy Trading: A Comprehensive Guide to Maximizing Profits
NordFX Copy Trading: A Comprehensive Guide to Maximizing Profits
Tips to Choose the Right Second Citizenship Program
Tips to Choose the Right Second Citizenship Program
Bitcoin’s continued slide down
Bitcoin’s continued slide down
A new round of crypto market mistrust
A new round of crypto market mistrust
Bitcoin holds its range, but pressure mounts
Bitcoin holds its range, but pressure mounts
Bitcoin unlikely to end correction
Bitcoin unlikely to end correction
Bitcoin looks set to take a severe dive
Bitcoin looks set to take a severe dive
Bitcoin set for a deeper correction
Bitcoin set for a deeper correction
Bitcoin falls under pressure
Bitcoin falls under pressure

Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 84.8% 16 $41 576.95 5.30% 12.15% $813 278 074 420 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 84.8% 27 $2 235.52 3.52% 10.36% $268 783 743 289 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 90.8% 1 $1.000270 0% -0.01% $89 671 794 426 USDT 7 days price change
4 Binance Coin (BNB) BNB Binance Coin predictions 82% 26 $228.99 0.40% 1.18% $34 736 943 859 BNB 7 days price change
5 XRP (XRP) XRP XRP predictions 79.6% 30 $0.619161 -1.50% 2.49% $33 365 715 637 XRP 7 days price change
6 Solana (SOL) SOL Solana predictions 65.2% 67 $61.81 -2.64% 12.13% $26 228 006 615 SOL 7 days price change
7 USD Coin (USDC) USDC USD Coin predictions 96% 1 $0.999862 0% -0.03% $24 495 724 959 USDC 7 days price change
8 Cardano (ADA) ADA Cardano predictions 83.2% 28 $0.401317 1.98% 5.17% $14 170 456 557 ADA 7 days price change
9 Dogecoin (DOGE) DOGE Dogecoin predictions 77.2% 39 $0.087341 3.07% 10.22% $12 410 677 949 DOGE 7 days price change
10 Lido stETH (STETH) STETH Lido stETH predictions 91.2% 1 $2 941.39 -0.40% -3.32% $10 258 752 564 STETH 7 days price change
11 TRON (TRX) TRX TRON predictions 84.8% 19 $0.103487 0.21% -0.87% $9 160 263 969 TRX 7 days price change
12 Wrapped TRON (WTRX) WTRX Wrapped TRON predictions 84% 21 $0.103391 0.15% -1.06% $9 151 745 199 WTRX 7 days price change
13 Chainlink (LINK) LINK Chainlink predictions 75.2% 43 $15.58 -2.52% 8.92% $8 673 186 738 LINK 7 days price change
14 Toncoin (TON) TON Toncoin predictions 85.2% 20 $2.42 0.07% 1.16% $8 291 917 227 TON 7 days price change
15 Avalanche (AVAX) AVAX Avalanche predictions 56.8% 87 $21.88 -0.53% 6.31% $7 991 965 891 AVAX 7 days price change

Be the first to receive Cryptocurrency Price Predictions and Forecasts daily

Get cryptocurrency price predictions, forecasts with analysis and news right to your inbox.

© 2015-2023 Crypto-Rating.com

The usage of this website constitutes acceptance of the following legal information. Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website, including information about the cryptocurrencies and bitcoin is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Crypto Rating shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about cryptocurrencies. The entire responsibility for the contents rests with the authors. Reprint of the materials is available only with the permission of the editorial staff.