The current Bitcoin settlement creates an interesting risky reward situation for bulls

The current Bitcoin settlement creates an interesting risky reward situation for bulls

The bitcoin (BTC) chart has formed a symmetrical triangle, which currently has a firm range between $ 28,900- $ 30,900. This pattern lasts for almost two weeks and may extend for another two weeks before the price moves more decisively.

Price 12 hour BTC / USD at Kraken. Source: Trade View

For those unfamiliar with technical analysis, a symmetric triangle can be bullish or bearish. In this sense, the price comes together in a series of lower and upper peaks. The decisive moment is to break the support or resistance when the market finally decides on a new trend. So the price could break out in either direction.

According to bitcoin derivatives data, investors have a chance to price a decline, but recent improvements in the global economic outlook may come as a surprise.

The macroeconomic situation has improved and bitcoin miners are still busy

According to Cointelegraph, U.S. – driven macro conditions helped push crypto markets higher on May 23rd. Prior to the market opening, US President Joe Biden announced plans to cut trade tariffs with China, boosting investor morale.

According to the latest estimates, Bitcoin network difficulty will decrease 3.3% during its next automatic readjustment this week. This is the biggest downward shift since July 2021 and the profitability of the injured miners is clearly declining bitcoins.

However, miners are showing no signs of capitalization, even though their wallet movements reached low 30 – day exchanges on May 23, according to chain analytics platform Glassnode.

While sentiment flows and miners are important, traders should follow how whales and market indicators are positioned on futures and options contracts.

Bitcoin derivatives metrics are pessimistic neutral

Retail traders generally avoid quarterly futures due to their fixed set date and price difference from spot markets. However, the main advantage of these contracts is that there are no fluctuations in the funding rate, so arbitration offices and professional traders are often involved.

These fixed month contracts typically trade at a small premium to spot markets, as sellers demand more money to delay a longer settlement. This situation is technically called “contango” and is not exclusive to crypto markets. Therefore, the futures should trade at an annual premium of 5-15% in healthy markets.

3-month annual bitcoin futures premium. Source: Laevitas

According to the above data, bitcoin’s underlying indicator has been below 4% since April 12th. This reading is typical of bear markets, but it is encouraging that it has not declined after withdrawing to $ 25,400 on May 12.

To rule out instrument-specific externalities of futures instrument, traders should also analyze bitcoin options markets. The 25% skew delta is extremely useful as it shows when bitcoin arbitrage desks and market makers are defending overpricing up or down.

If investors fear Bitcoin price crash options, the asymmetry indicator will rise above 12%. On the other hand, the generalized excitation shows a negative asymmetry of 12%.

25% skew delta of 30-day bitcoin options: Source: Laevitas

The skewness indicator rose above 12% on May 9, entering the “fear” level as options traders bid higher to guard against the downside. In addition, the recent figure of 25.4% is the worst ever reading for this indicator.

Related: Bitcoin Targets Record Eighth Red Candle Weekly, As BTC Prices Limit Weekend Losses

Be brave when most people are scared

In short, there is still an emphasis on BTC options markets and this suggests that professional traders are not confident in taking downside risk. The bitcoin futures premium kept up a bit, but the indicator shows a lack of interest from buyers of long leveraged sites.

Taking a bullish bet may be contradictory now, but at the same time, an unexpected price rise would surprise professional traders. Thus, this creates an attractive risk rewards situation for bitcoin bulls.

The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of Cointelegraph. All investments and trades involve risk. You should do your own research before making a decision.

Wall Street open and bitcoin price coma before as the market seems to be trying to recover

Wall Street open and bitcoin price coma before as the market seems to be trying to recover

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