Key Bitcoin price indicators signal bulls bought the $43K retest

Key Bitcoin price indicators signal bulls bought the $43K retest 1
Key Bitcoin price indicators signal bulls bought the $43K retest 2

Key Bitcoin price indicators signal bulls bought the $43K retest 3

Bitcoin (BTC) crashed on the 20th. February saw a 26 percent drop from the record price of $58,300, but technically this is a purely psychological drop as digital assets easily held steady at $43,000. This downward move caused indicators such as the Crypto Fear & Greed index to reach its lowest level in five months, at 38.

Bitcoin price in US dollars on Coinbase. Source : TradingView

Key Bitcoin price indicators signal bulls bought the $43K retest 4

The $15,400 drop may seem unusual, but the 2017 bull run saw six corrections of 25% or more. When BTC on the 8th. The first of January reached a record $42,000, the next two weeks saw a negative jump of 31.5% to $28,750.

As Bitcoin attempted to set a bottom, derivatives contracts eliminated any bullish signal and immediately posted alarming data. For example, open interest for futures contracts fell 22% after the close on the 21st. February had peaked at $19.1 billion.

Bitcoin futures are open interest contracts. Source : Bybt

Key Bitcoin price indicators signal bulls bought the $43K retest 5

As indicated above, BTC open futures are down 22% due to the impact of the monthly expiration. The remaining $14.9 billion, while significant, is still 44% higher than last month’s data.

Derivatives indicators have stabilised, indicating a healthy market

By measuring the futures premium at the current spot level, one can infer whether professional traders are more bullish or bearish. As a general rule, markets should have a slightly positive annual rate, called a constant situation.

bitcoin 1 month annual premium on futures contracts. Source : TradingView

Key Bitcoin price indicators signal bulls bought the $43K retest 6

Although the monthly futures premium fell from its ultra-high level of 6% in mid-February, it still managed to stay above 1.2%. The annual equivalent is a peak of 70% compared to the current 17%. Thus, the premium on futures contracts indicates that excessive leverage on the buyer’s side has been removed, but we are nowhere near a bear market.

Meanwhile, in the 25% delta spread market, BTC options measure the price of the call from neutral to wide versus equivalent bearish trajectories.

bitcoin 1 month options 25% delta tilt. Source: laevitas.ch

Key Bitcoin price indicators signal bulls bought the $43K retest 7

The indicator measures the fear and greed of options traders, and was at a very low level until the 21st century. February at -5%, meaning upside hedging has become more expensive. Last week, the 25% slope of the delta moved into neutral territory, which was last observed almost five months ago.

This once again confirms that market makers and major traders are not desperate to undo the signs of overoptimism seen in January.

The absence of a bear cub in an accident is a good signal.

As institutional investors continue to focus on this market, Bitcoins volatility tends to have less impact on derivatives markets. To illustrate this new situation, the indicators of the BTC futures and options market still showed no warning signals for a long time, despite the 26% price drop.

Positive news and institutional investor interest in Bitcoin should not suffer from the recent $43,000 test. So when companies and mutual funds accumulate Bitcoin, these moves should be viewed as buying opportunities, rather than declines as catastrophic.

The views and opinions expressed herein are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and every stage of trading involves risk. You should do your own research when you make your decision.

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