Cryptocurrency markets have risen 12.5% in the last seven days to reach $ 2.44 trillion in market value. However, the move does not appear to create confidence, as the same level was tested 16 days ago when a 27% recall was followed by an attempt by Ether (ETH) to break $ 3650 over the next six days.
Regulation appears to be a major concern for buyers, as the US House of Representatives is expected to vote on a $ 1 trillion infrastructure bill this month. In addition to deciding who qualifies as an intermediary, the law imposes anti-money laundering (AML) and knows the customer’s requirements (KYC) for many types of cryptocurrency transactions, which can also be detrimental to DeFi protocols.
8 best cryptocurrency trades in 7 and 30 days. Source: CoinMarketCap
As explained above, negative performance in the top 10 cryptocurrencies has affected investor sentiment over the past 30 days. For this reason, it is important to measure more than just the nominal price of bitcoin (BTC). Traders should also analyze Bitcoin derivative indicators such as futures market premiums and options.
The futures premium shows that traders are a bit bullish.
The underlying price is often referred to as the futures premium and measures the difference between long-term futures contracts and the current spot market level.
Expect an annual premium of 5% to 15% in healthy markets – a situation called contango. This price difference is due to sellers asking for more money to postpone the settlement for a longer period.
Annually for 3 months of bitcoin futures. Source: Laevitas.ch
As shown above, the current annual premium of 9% is neutral, but shows improvement over the last two weeks. This indicates that traders are cautious and optimistic, and allows for longer influence when confidence has been completely restored.
Option traders come out of fear mode
In order to exclude externalities from an instrument of the future, it is also necessary to analyze the option markets.
A delta deviation of 25% compares similar call (buy) and sell (sell) alternatives. The indicator will be positive when fear prevails, as the premium for protective put options is higher than for similar risky calls.
The opposite is proven when market makers are bullish, which causes the 25% delta deviation indicator to turn into negative territory. Readings from negative 8% to positive 8% are considered neutral.
Deribit BTC Options Delta deviation 25%. Source: Laevitas
Notice how bitcoin alternative traders hit the “fear” level on September 25 when the $ 41,000 support was tested several times. That said, there has been a sharp change since September 30, and the index is now in neutral territory.
In the current situation, 25% deviation from the basis for futures and options corresponds to the typical scenario “the order book is half full”. This means that even though Bitcoin reached a height of 27 days above the resistance of 50,000 dollars, buyers can still use extra influence before the numbers start flashing with excessive strain or euphoria.
A breach of the current meager $ 50,000 derivative data is usually interpreted as a weakness. Given that the total cryptocurrency capital is still at the same level as 30 days ago, and the problems from the regulators have not been reduced, there is nothing to worry about. At present, neither the futures nor the options markets are showing signs of declining.