Bullish BTC traders are overexploiting, but the bears’ resistance to pull back could intensify Bitcoin’s price competition.
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The price rose 12% on February 15, marking the highest daily close in six months. Ironically, the move came as gold hit a 40-day low of $1,826, signaling a possible shift in the risk assessment of cryptocurrencies investors.
A stronger than expected US inflation report on February 14 showed consumer prices rose 5.6% year on year, followed by data showing perfect consumer demand, encouraging traders to reassess Bitcoin’s lack of value. US retail sales rose 3% in January compared to the previous month – the largest increase in nearly two years.
On-chain data shows that the recent gains can be traced to a surprise investor who started buying on February 10. According to Lookonchain data, about $1.6 billion has entered the crypto market between 10 and 15 February. three known USD Coin
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Wallets send money to different exchanges almost instantly.
More importantly, news emerged that the Binance exchange is planning to face sanctions and end any legal and regulatory investigation in the US, according to a February 15 Wall Street Journal report. The chief executive officer of the exchange, Patrick Hillmann, said that Binance “was very positive and felt very good about where these negotiations were going.”
Let’s take a look at derivatives calculators to better understand how skilled traders are in today’s market.
Bitcoin spreads have entered the “FOMO” phase.
Margin markets provide insight into the performance of traders as they allow investors to borrow cryptocurrencies to leverage their positions.
For example, one can increase exposure by borrowing stablecoins to buy (long) Bitcoin. On the other hand, Bitcoin lenders can bet (in short) with cryptocurrency. Unlike futures contracts, the margin between long and short positions is not always equal.
The chart above shows that OKX traders’ margin-debt ratio has increased between January 13 and January 15, showing that professional traders added long positions as the Bitcoin price broke above $23,500 resistance.
One could argue that the need to borrow stablecoins to stabilize is as high as stablecoin/BTC lending above 30 is not unusual. However, traders tend to put more security after a few days or weeks, which causes the signal to leave the FOMO level.
Options traders remain skeptical of a sustained rally
Traders should also analyze the options markets to understand whether the recent rally has caused investors to become more confused. 25% delta bias is a clear indicator when arbitrage desks and market makers are charging to protect the upside or downside.
The indicator compares the same call (buy) and put (sell) options and will be good when the fear is high because the safety of the protective put is higher than the risky call options.
In short, the skew will move above 10% if traders fear a crash in the price of Bitcoin. On the other hand, the individual voltages show a negative bias of 10%.
Related: $24K Bitcoin – Is It Time to Buy BTC and Altcoins? Watch Market Talks live
Note that the 25% delta bias has not intervened in the past two weeks, showing the same prices for bullish and bearish strategies. This reading is very unusual considering that Bitcoin rose 16.2% from January 13 to January 16, and usually one would expect a great stability that makes the bias move below 10.
One thing is for sure, there is a lack of bearish sentiment in the futures and options markets. However, there are concerns about the continued demand for consumer gear, although it is too early to say whether it is a problem.
The longer Bitcoin goes above $24,000, the more experienced traders are comfortable with the current rally. Also, the bears using the futures markets had $235 million withdrawn between January 15 and January 16, which caused the desire to bet on the bet to decrease. Therefore, derivatives markets continue to favor strong growth.