The recent price change in bitcoin (BTC) has disappointed most investors, especially considering that the overall market value of the alternative currency rose 24% in nine days, hitting a record high of $ 1.35 trillion on May 9th.
Bitcoins accumulated 62% gain in 2021 leaving bitcoin traders somewhat disappointed with altcoins and memes pumped to new daily highs.
Bitcoin price on Coinbase, in USD. Source: TradingView
On May 10, Fidelity, a $ 3.8 trillion global asset manager, filed a Bitcoin Exchange Traded Fund (ETF) application with the US Securities and Exchange Commission. Fidelity’s Bitcoin Wise Origin (BTC) has partnered with the Chicago Board Options Exchange (CBOE) and will close the SEC’s first response window within 44 days.
On May 11, Palantir (PLTR), a $ 30 billion research firm founded by billionaire Peter Thiel, announced that it would accept Bitcoin payments. The company will likely follow in the footsteps of Tesla (TSLA) and MicroStrategy (MSTR) by adding BTC to the balance sheet, and the company may have over $ 2 billion in cash to invest.
In other news, the proposed Taproot update aims to make complex transactions cheaper, faster and easier to publish. Most importantly, this update will provide some privacy to the multi-signature and temporary blocking features.
Taproot activation only gets the green light if 90% of all recovered blocks turn on the activation signal before 11 August.
Despite all this positive news, the BTC price action has not made its usual bullish turn. The most immediate obstacle is the lack of regulations. Joanna Wasick, partner at the law firm BakerHostetler, told Cointelegraph:
“How many people using encrypted payments know exactly the tax implications of the payment transactions?”
Dealers do not require excessive influence for long positions
The first evidence that traders are completely skeptical comes from the extremely modest constant level of financing. Forward contracts have a built-in exchange rate that is usually charged every eight hours to ensure that there are no imbalances in currency risk. Although the open interest is always the same for buyers and sellers, their influence can vary.
When long positions require more influence, they pay commissions. Therefore, the current situation can be interpreted as bullish. The opposite happens when short positions use more leverage, which results in a negative financing rate.
Financing rate 8 hours for bitcoin futures. Source: Bybt
Note that the current interest rate of 0.02%, which corresponds to 1.8% per month, is much lower than the last peaks. While professional traders tend to prefer futures contracts for a tight monthly calendar, segmentation over fixed contracts avoids the hassle of expiration. Thus, these data indicate a lack of appetite since April 17.
Options deviation indicator may become bullish
To better understand how professional traders position themselves, investors should consider the options markets. Purchase options allow the buyer to receive Bitcoin at a fixed price at the end of the contract. On the other hand, put options insure buyers and protect against falling prices.
When market makers and professional traders focus on growth, they will demand a higher premium on call options, resulting in a negative rejection index of 25%.
Bitcoin Options 30 days with 25% deviation from delta. Source: laevitas.ch
The deviation index from -10 to +10 is neutral, as it has been since 15 April. These data indicate a balanced risk assessment for whales and marketers between negative and upward risk.
With prices falling today, there is little evidence that options traders are bullish. These data are also consistent with BTC’s perpetual futures markets.
Bitcoin has managed to close over $ 50,000 in 65 of the last 66 days, which most likely creates a “comfort zone” for the bulls. Therefore, as long as this support persists, there is still hope that Bitcoin will hit a new record high.