Latest news about Bitcoin and all cryptocurrencies. Your daily crypto news habit.
The futures premium, top traders’ long-to-short ratio and options skew all signal that pro traders still feel positive about Bitcoin price.
Bitcoin (BTC) price is still 4.4% down from its Aug. 23 high at $50,500, leading some traders to question whether the local top marked the end of the recent 34-day long bull run.
Even with the current correction, derivatives data and the maneuvers of professional investors are not flashing any bearish signals.
Bitcoin price in USD at Coinbase. Source: TradingView
On Aug. 24, prominent technical analyst John Bollinger suggested that Bitcoin price could be pushed lower in the short term. A pseudonymous market analyst called 'CryptoHamster' shared a similar bearish outlook based on analyzing a technical pattern called an ascending channel.
Bearish news coming from exchange regulation could have also diminished investors' interest, and this week the United Kingdom's Financial Conduct Authority (FCA) released a supervisory notice against Binance exchange.
According to this week's regulatory action, the exchange was asked to take down its live advertisements and promotions on Binance's website and social media.
A bullish trend can be seen in futures markets
To assess whether professional traders became pessimistic, analysts should monitor the futures premium, also known as 'basis.' This indicator measures the price gap between futures prices and the regular spot market.
The one-month contract should trade with a 6% to 14% annualized premium in healthy markets because sellers demand a higher price to postpone settlement, creating a price difference.
Huobi 1-month futures basis. Source: Skew
Notice how the indicator has improved from a neutral-to-bearish 4% annualized premium on Aug. 19 to a more healthy 9% level. This shows that the metric is moving in the opposite direction of the zone, which would be considered bearish.
The top traders long-to-short ratio is still optimistic
To 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 the traders' effective net position by gathering data from multiple markets.
Top traders BTC long/short ratio. Source: Bybt.com
It is worth noting that exchanges gather data on top traders differently because there are multiple ways to measure a clients' net exposure. Therefore, any comparison between different providers should be made on percentage changes instead of absolute numbers.
Both OKEx and Huobi displayed an increase in the top traders' long-to-short ratio, indicating that either they closed short positions or opened long ones, which is a bullish move. Binance was the only exception because the indicator dropped, indicating some pessimism, but the variation over the past couple of days has been insignificant.
Options markets are slightly bullish
The 25% delta skew compares similar call (buy) and put (sell) options side-by-side. It will turn positive when the protective put options premium is higher than similar risk call options.
The opposite holds when market makers are bullish, and this causes the 25% delta skew indicator to enter the negative range.
Deribit Bitcoin options 25% delta skew. Source: laevitas.ch
The above chart shows that there had been some bearishness ahead of July 19, but Bitcoin options markets have flipped neutral since then. Moreover, there are no signs that professional traders are growing worried about a potential price drop because the 25% skew indicator remains near zero.
Both futures and options markets show confidence from investors despite the worrisome technical analysis and shaky regulatory scenario.
Consequently, at least according to derivatives markets, dips are for buying.
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.
Publication date
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.