The lack of cascade liquidations, the 25% delta skew, and the margin lending ratio all point to a $56,500 low for Bitcoin.
“Expect the unexpected,” says the first Bitcoin (BTC) trading rule. There have been five occurrences of daily earnings of 20% or more in the last year, as well as five daily deductions of 18%. To be honest, relative to the recent heights, the volatility over the last three months has been very low.
New traders in Bitcoin are frequently astonished by the 19 percent decline after the top place, whether they are multi-million dollar institutional fund managers or trading investors. Many people are even more surprised by the fact that the current adjustment of $13,360 from the maximum of $69,000 on November 10 occurs in just nine days.
Bitcoin Price Chart – Source: CoinMarketCap
Cryptocurrency traders are notorious for their high-volume trading, and about $600 million in long-term (buy) Bitcoin futures contracts were canceled just four days ago. Although this appears to be a respectable figure, it represents less than 2% of BTC’s overall market capitalization.
The lack of a large cash flow event despite high price swings was the first indicator that a 19% to $56k reduction was marked on the ground. Open interest would imply a rapid change, similar to that witnessed on September 7th, if there were excessive consumer gains in gaming, an unhealthy market signal.
Investors can look at a 25% delta skew to see how concerned experienced traders are. By comparing the same phone (purchasing) and setting (selling) possibilities apart, this guide provides a solid perspective on the sensation of “fear and greed.”
This statistic will be acceptable if the bear premium for placement options is larger than the call premium for options with the same risk. This is frequently referred to as a “fear” disorder. Aggression or “greed” is indicated by the opposing tendency.
Because values between 7% negative and 7% positive are deemed neutral, nothing out of the ordinary happened during the current $568k support test. If pro traders and arbitrage traders found a bigger chance of a market crash, this indicator would have climbed by more than 10%.
Margin trading allows investors to borrow bitcoin in order to use it in their trading position, allowing them to make more money. To buy cryptocurrencies, for example, one can borrow Tether (USDT) and increase their exposure. Borrowers of Bitcoin, on the other hand, can only make it shorter by betting on declining prices.
In contrast to futures contracts, the balance between the length of jeans and the length of shorts is not always the same.
The figure illustrates that traders have been borrowing more USDT recently since the rate has risen. Because the index likes stablecoin borrowing 13x times, the data is significantly reliant on borrowing, which could imply their positive exposure to Bitcoin Price.
In the face of recent BTC price changes, all of the following signs are solid. Anything can happen in crypto, as previously stated, but exit data indicates that $ 56,000 was less than local.