Bitcoin
BTC$30 326.91

1.12%

Ethereum
ETH$2 076.58

2.21%

Tether
USDT$0.999001

0.01%

USD Coin
USDC$1.000230

-0.02%

Binance Coin
BNB$304.44

2.05%

XRP
XRP$0.435585

2.31%

Two key Bitcoin trading indicators suggest BTC is ready for a 62% upside move


20 Jan 2022

#Bitcoin

BTC derivatives metrics currently mirror late-September readings which preceded a strong 62% move in Bitcoin price. Bitcoin (BTC) has been below $45,000 for 14 days and is currently 40% below the $69,000 all-time high. This movement holds similarities to late-September 2021, when Bitcoin price flat-lined for 11 days and was 36% below the previous $64,900 all-time high on April 14.

To understand whether the current price momentum mimics late September, traders should start by analyzing the Bitcoin futures contracts premium, which is also known as "basis." Unlike a perpetual contract, these fixed-calendar futures do not have a funding rate, so their price will differ vastly from regular spot exchanges.

By measuring the expense gap between futures and the regular spot market, a trader can gauge the level of bullishness in the market. Excessive optimism from buyers tends to make the three-month futures contract to trade at a 15% or higher annualized premium (basis).

For example, earlier in September, the basis rate ranged from 9% to 13%, indicating confidence, but on Sept. 29, right before Bitcoin broke out above $45,000, the 3-month futures premium was at 6.5%. Generally, readings below 5% are typically deemed bearish, so a 6.5% reading in late September meant investors were displaying low confidence.

Regarding the current market conditions, there are a lot of similarities to September 2021, right before Bitcoin broke $45,000 and initiated a 62% rally. First, the current Bitcoin 3-month futures premium stands at 6.5% and the indicator recently ranged from 9% to 11%, reflecting mild optimism. Unexpected positive market moves happen when investors least expect it and this is precisely the scenario happening right now. To confirm whether this move was specific to the instrument, one should also analyze options markets. The 25% delta skew compares equivalent call (buy) and put (sell) options. The indicator will turn positive when "fear" is prevalent because the protective put options premium is higher than the 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. The 25% delta skew ranged near 10% by late Sept. 2021, indicating distress from options traders. Market makers and arbitrage desks were overcharging for protective put (bearish) positions.

According to the current 25% delta skew indicator, options traders are neutral. However, on Jan. 10 the metric touched the 8% positive threshold, signaling a mild bearishness.

Derivatives metrics show that the current market conditions resemble late-September when Bitcoin reversed a 24-day downtrend and initiated a 62% rally in the following three weeks. Will this phenomenon repeat itself? Bitcoin bulls certainly hope so.


Related

Bitcoin’s short-term upward channel
Bitcoin’s short-term upward channel
Has Bitcoin reached the bottom?
Has Bitcoin reached the bottom?
Bitcoin's Price Plunges Below $34,000
Bitcoin's Price Plunges Below $34,000
Bitcoin stabilised but has trouble to reverse strongly
Bitcoin stabilised but has trouble to reverse strongly
Bitcoin will fall until the bulls capitulate
Bitcoin will fall until the bulls capitulate
The culmination of the battle for the trend in Bitcoin
The culmination of the battle for the trend in Bitcoin
Bitcoin undecided on a scenario for May
Bitcoin undecided on a scenario for May
Bitcoin: How the $1 million rally begins
Bitcoin: How the $1 million rally begins
Bitcoin's last hope for $38K
Bitcoin's last hope for $38K

Top Cryptocurrencies with Price Predictions

# Crypto Prediction Accuracy CVIX Price 24h 7d Market Cap 7d price change
1 Bitcoin (BTC) BTC Bitcoin predictions 65.6% 74 $30 326.91 1.12% -1.69% $577 507 167 326 BTC 7 days price change
2 Ethereum (ETH) ETH Ethereum predictions 66.4% 75 $2 076.58 2.21% -10.32% $250 891 465 462 ETH 7 days price change
3 Tether (USDT) USDT Tether predictions 96% 1 $0.999001 0.01% -0.08% $75 676 462 108 USDT 7 days price change
4 USD Coin (USDC) USDC USD Coin predictions 96% 1 $1.000230 -0.02% -0.04% $52 257 987 348 USDC 7 days price change
5 Binance Coin (BNB) BNB Binance Coin predictions 65.6% 71 $304.44 2.05% -3.10% $49 708 837 503 BNB 7 days price change
6 XRP (XRP) XRP XRP predictions 66.8% 66 $0.435585 2.31% -13.81% $21 057 536 595 XRP 7 days price change
7 Cardano (ADA) ADA Cardano predictions 68.8% 66 $0.575630 2.12% -8.16% $19 421 209 986 ADA 7 days price change
8 Solana (SOL) SOL Solana predictions 63.2% 76 $56.43 3.88% -13.30% $19 038 552 817 SOL 7 days price change
9 Binance USD (BUSD) BUSD Binance USD predictions 96% 1 $1.002005 0.22% 0.35% $18 231 060 479 BUSD 7 days price change
10 Dogecoin (DOGE) DOGE Dogecoin predictions 62.4% 73 $0.089988 2.40% -16.42% $11 938 784 018 DOGE 7 days price change
11 Polkadot (DOT) DOT Polkadot predictions 67.2% 74 $11.01 1.97% -0.91% $10 874 092 462 DOT 7 days price change
12 Avalanche (AVAX) AVAX Avalanche predictions 66.4% 75 $34.13 2.44% -22.27% $9 183 931 187 AVAX 7 days price change
13 Wrapped Bitcoin (WBTC) WBTC Wrapped Bitcoin predictions 67.2% 74 $30 349.83 1.15% -1.21% $8 599 743 334 WBTC 7 days price change
14 TRON (TRX) TRX TRON predictions 71.6% 60 $0.072402 4.12% -4.60% $7 070 299 328 TRX 7 days price change
15 SHIBA INU (SHIB) SHIB SHIBA INU predictions 64.8% 75 $0.000013 4.03% -21.64% $6 883 934 346 SHIB 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.

© 2015-2022 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.