Traders are using various strategies to determine whether the price of bitcoin is down, but on-chain activity and derivatives data indicate that the situation remains uncertain.
Is bitcoin price down yet? According to @noshitcoins, derivatives and on-chain data are signs that further declines may occur.
Traders have been trying to reverse the much awaited trend since bitcoin (B T c) Commenced its 48% improvement to $ 30,000 on May 12. The move ended with $ 12 billion worth of future long positions are being liquidated, And to date, the trust of merchants has diminished somewhat.
The community began searching everywhere for trend reversal signals including technical patterns, United States CPI inflation data and Bitcoin exchange deposit. For example, some analysts said that a high high, following a move above $ 40,000, would be sufficient.
We have to build a new high to confirm the local floor.
– mortal (@inmortalcrypto) May 24, 2021
However, two days later, bitcoin managed to break $ 40,000, though the move did not last more than six hours. At the same time, other traders estimated that a $ 30,000 lower re-test is necessary before rebound.
#Bitcoins $ Btc #B T c Here a descending widening is forming the wedge. It is fast but there are two possible scenarios.
Green: Breaking the resistance and maintaining the uptrend.
Red: Re-check the lower part of the wedge (~ 30k) and bounce from there. pic.twitter.com/8L26kQvf7X
– Johnny Wu | Never DM you for money (@ j0hnnyw00) May 25, 2021
Although there may also be empirical evidence or arguments supporting those statements, market prices do not always react to external news or past chart structures. Unlike stocks, bitcoin investors cannot rely on commonly used valuation multiples or even comparisons.
Certainly, a digital store of value is a use case, but at the same time, it is uncensored and easily transferable. In addition, some users value bitcoin’s peer-to-peer fiat variability outside KYC-regulated exchanges. Another factor to consider are investors who are expanding their bitcoin portfolio due to a lack of association with traditional financial assets.
This panacea of diverse and sometimes conflicting narratives creates barriers to measuring market potential, adoption status, and even the effectiveness of recent developments.
Some will be happy for Tesla and big companies making bitcoin reserves, while others may not care who BTC is and instead focus on the challenges of scalability and fungibility.
Skew: Professional “Fear and Greed” Indicator
Call options allow the buyer to receive bitcoins at a fixed price upon the termination of the contract. Put options, on the other hand, provide insurance for buyers and protect against price drops.
Whenever market makers and professional traders turn bullish, they will demand a higher premium on call (buy) options. This trend will lead to a negative 25% Delta Skew indicator. On the other hand, if the downside protection is more expensive, the skew indicator will turn positive.
A 25% delta skew oscillates between a negative 10%, and a positive 10% is generally considered neutral. This balanced position remained in place until May 16, as bitcoin lost a significant $ 47,000 support, which was for 76 days.
As the market deteriorated, the 25% delta slant indicator and the cost of protective options increased. Therefore, calling the market down seems premature until the metric establishes a more neutral pattern near the 5% level.
The active bitcoin supply signals that weak hands need to cool down
Traders also monitor the number of recently active BTCs. This indicator by itself cannot be considered to be fast or slow because it does not give information about how old the addresses involved are.
A 500% price rally from October 1, 2020, and a peak of $ 9,900 on April 14, 2019, led to a large increase in supply in the months preceding the rally. When this metric presents a sharp decrease, it indicates that investors are no longer interested in participating at the current price level.
There are currently 2.2 million BTCs active in the last 30 days, and this is well above the levels seen before October 2020.
As is currently the case, traders should not let Bitcoin down, at least until the market has relevant activity around the $ 40,000 level.
The views and opinions expressed here are only those of Author And do not necessarily reflect the views of Cointegraf. Every investment and business move involves risk. You should do your research yourself while making a decision.