Bitcoin (BTC) price continues to fight at the $24,000 resistance and the price was rejected there on August 10, but the rejection was not enough to get the price out of the 52-day uptrend channel. The channel has $22,500 support, and this bullish formation indicates that BTC price will eventually reach $29,000 by early October.
Bitcoin / USD 12 hour rate. Source: TradingView
Bitcoin derivatives data shows buyers’ lack of interest in leverage (bulls), but at the same time it doesn’t price the higher odds of a sudden crash. Oddly enough, Bitcoin’s recent decline on August 9 was accompanied by negative performance from US-listed stocks.
On August 8, chip and video card maker Nvidia Corp. (NVDA) announced that its sales for the second quarter will report a 19% decline compared to the previous quarter. Moreover, the US Senate passed a bill on August 6 that could negatively affect corporate earnings. Despite freeing up $430 billion in “climate, healthcare, and tax” funding, the ruling will impose a 1% tax on share buybacks by publicly traded companies.
The high correlation between traditional assets and cryptocurrencies remains a major concern for some investors. Investors should not pre-empt even if inflationary pressure abates because the US Federal Reserve is closely monitoring employment data. The latest reading showed an unemployment rate of 3.5% typical of overheated markets, forcing the monetary authority to continue raising interest rates and canceling stimulus debt purchase programs.
Limiting risk positions should be the norm so that investors clearly signal that the US central bank is closer to easing tighter monetary policies. This is exactly the reason why cryptocurrency traders are keeping a close eye on the macroeconomic figures.
Currently, Bitcoin lacks the strength to break the $24,000 resistance, but traders should study derivatives to gauge the sentiment of professional investors.
Bitcoin Derivative Metrics Neutral to Bearish
The Bitcoin futures annuity measures the difference between long-term futures contracts and current spot market levels. The indicator should be between 4% to 8% to compensate traders for “holding” funds until the contract expires. Thus, levels below 2% are very bearish, while numbers above 10% indicate excessive optimism.
Annuity for 3-month Bitcoin futures contract. Source: Laevitas
The chart above shows that this metric dropped below 4% on June 1, reflecting traders’ lack of demand for long (bull) leveraged positions. However, the current reading of 2% is not particularly alarming, given that Bitcoin is down 51% year-to-date.
To rule out the externalities of a futures instrument, traders should also analyze the Bitcoin options markets. A delta skew of 25% is a milestone whenever arbitrage desks and market makers are overcharging in order to protect against an opposite or upside trend.
Related: Bitcoin Price Reaches $24,000, Ethereum Price Reaches Two-Month High as US Inflation Fades
If these traders fear the collapse of the bitcoin price, the skew indicator will move above 12%. On the other hand, generalized excitation reflects a negative deviation of 12%.
Bitcoin 30-day options 25% delta skew: Source: Laevitas
The data shows that the index deviation has been between 3% and 5% since August 5, which is considered neutral territory. Options traders are no longer overpricing for pullback protection, which means they may lack excitement, but at least they have given up on the feelings of “fear” seen in the past few months.
Given the current bullish channel pattern in Bitcoin, Bitcoin investors probably won’t worry too much about the lack of buying demand, according to futures market data.
Of course, there is a healthy uncertainty that is reflected in derivatives metrics, but the path to the $29,000 BTC price remains clear as long as inflation and employment statistics are kept in check.
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 risks. You should do your research when making a decision