bitcoin price

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Avatar for Rey25
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3 years ago

The price of Bitcoin (BTC) has been continuing the previous week’s weakness as the support of $9,000 has been tested many times. However, the market itself is not acting bearish because altcoins such as DOGE, for example, are surging left and right. 

Is the market ready for a momentum shift and a big volatile move by BTC, the top-ranked cryptocurrency by market capitalization?  

Crypto market daily performance. Source: Coin360

Bitcoin acting on final levels for support to justify bull scenarios

The price of Bitcoin is still resting at a significant level of support as there is a stalemate in place between the bulls and bears.

As Bitcoin’s price has been consolidating, there’s an argument to be made that the price is making constant higher lows since March 12. The most recent low is the area between $8,700-8,900. That’s the bullish case.

However, the price has been dropping since the peak high at $10,300 and has been making lower highs since. That leads to the overall conflict in the markets as both bullish and bearish arguments exist.

BTC/USDT 1-day chart. Source: TradingView

Bitcoin price is currently above the 100-day and 200-day moving averages (MAs), as the chart shows. At the same time, the crucial support level of $8,700-8,900 is still holding and also established a smaller support level at $9,050-9,100, which is where BTC/USD is currently at.

Meanwhile, a potential ascending triangle is ready to form if the price of Bitcoin breaks above $9,300 in the short term.

BTC/USD 4-hour chart. Source: TradingView

The 4-hour chart shows a clear breakdown of the $9,150-9,200 level, which is currently being tested for resistance and a confirmation of this support/resistance flip as it’s currently being supported by the $9,000-9,050 level.

This is remarkable for Bitcoin’s price action lately, since the levels have become very narrow resulting in very small price moves. 

Additionally, as the price acts in such a small range, the volume decreases. Volume typically emerges via a breakout of any construction, which most likely is going to occur next week. 

Total market capitalization cryptocurrency 1-day chart. Source: TradingView

The market capitalization shows more strength than the Bitcoin price. The market cap is showing a clear upward trend that flipped each previous resistance level into support, such as $255 billion (upper green box). 

The next major step for market capitalization to break through is $270 billion. If that level breaks, a move toward $305 billion is likely.

Total altcoin market capitalization 1-day chart. Source: TradingView

The total market capitalization is showing more strength than Bitcoin because of the recent strength in altcoins as of late. 

The total altcoin market cap shows a clear breakout and support/resistance flip of $91-92 billion. As long as the green box remains to support and the total altcoin market cap doesn’t drop below, the altcoins will likely continue the rally.

The next area of resistance to watch is $113 billion, which is approximately twenty percent from here.

The bullish scenario is primarily built around breaking through the $9,200 resistance level, and another test of the support level could impact the bullish scenario.

BTC/USD 4-hour bullish scenario chart. Source: TradingView

The chart shows many untested levels on the upside, which are likely to get tested if $9,200 gets broken through. 

The first potential level of resistance after $9,200 is the $9,400 resistance zone. As the chart shows, there’s not been a “test” of this previous level. A test means the price rallies towards this level to confirm a rejection by that level. Such a rejection can be classified as resistance, and then the price reverses.

However, the chart shows many untested levels above the current price level. Not only is $9,400 untested, but a similar case can be seen with $9,600 and $9,800, for instance. If the price of Bitcoin breaks through $9,200, a support/resistance flip of that level increases the likelihood of $9,600 shortly.

Breaking through $9,200 also forms the ascending triangle structure. Then it becomes massively more likely that the price will be testing and revisiting the $10,000-10,500 region and a possible giant breakout further upward. 

BTC/USD 6-hour bearish scenario chart. Source: TradingView

The bearish scenario consists of rejecting the $9,200 level and then losing the $9K support level. Every rejection of the previous support level by the resistance would indicate further downward momentum for BTC the price becoming more likely.

These signals are confirmations for traders that the price of Bitcoin is ready for a further fall to occur. However, a breakthrough of $9,200 towards $9,400, after which $9,200 is lost as support would also mean that no buyers are stepping in — another bearish signal. 

As Bitcoin’s price is most likely going to accelerate once it breaks above the $10,500 barrier, the opposite is true for the bearish case if $8,600 support does not hold.

This is likely because there aren’t many support levels beneath $8,600, suggesting that the price can quickly drop $1,000 in a few hours as traders’ stop/losses may also add to downward pressure with the price dropping below a critical two-month-long support level. 

The next major support level beneath $8,600 is the $7,500 range.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision

Crypto assets are a high-risk investment. You should consider whether you understand the possibility of losing money due to leverage. None of the material should be considered as investment advice.

JUL 18, 202

Crypto analysts have recently suggested that Bitcoin options traders are flipping short-term bearish but data shows this is not the case.

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Bitcoin’s (BTC) consistent failure to break the $9,400 level over the past three weeks has led to some analysts becoming skeptical about the chance of a positive breakout. 

Although the $9,000 support has been holding strong for the past 50 days, any slightly negative indicator tends to get more attention from media and pundits. 

Recently, crypto media has focused on Bitcoin’s 25 % skew as proof that options traders are turning bearish in the short-term, but in reality there’s more to it than just interpreting signals from one data point. 

Skew is an options-trading concept that compares the volatility rates between put and call options within the same expiration date. A positive skew means implied volatility for puts is larger than calls, indicating a higher insurance cost for a downside price move.

One can usually assume that investors are more bearish, since the protection for downside is more costly than the upside protection but deeper analysis shows this is not the case at this moment. 

First, the current level is not something unseen in history, in fact, it’s quite the opposite. 

The most common measure uses 25% delta, which translate to options being priced with 25% probability of happening.

Bitcoin options 25% delta skew. Source: Skew

As the chart shows above, the 1-month 25% delta skew peaked at 23% on May 21, compared to the current 12%. 

Meanwhile, the 3-month options displayed similar movement with previous peaks at 6% compared to the actual 4%. By no means is skew indicating anything unusual or extremely bearish.

Regardless of the protection for the downside being more expensive than the upside, one should determine if investors are effectively buying such options. 

This is done by measuring call options open interest up to 20% from the current $9,150 price and comparing it to the put options down to 20%.

Deribit July Bitcoin options open interest. Source: Deribit

At the moment, call options up to $11,000 BTC total 13K, slightly more than the 12K puts open interest down to $7,500 BTC for July expiry. The following month the situation is even more biased with 18K calls open interest versus a mere 3.5K put options.

This shows that not much is being traded on the put options side, in comparison to the bullish call options. This ratio somewhat diminishes the importance of the skew curve

Another way to gauge professional investors sentiment is by looking at futures markets premium to perpetual and swaps. Longer-term contracts tend to trade somewhat higher, in a situation known as contango, signaling a healthy market.

Bitcoin futures annualized 3-month basis. Source: Skew

The 3-month annualized premium has been at a firm 4% level, its highest in 30 days, therefore, there is no evidence of fear or investors leaning bearish on the futures marke

It's improbable for a single derivatives indicator to provide a clear market picture as the Bitcoin (BTC) options market is still a nascent industry. Furthermore, a single exchange currently encompasses 80% of BTC options open interest. 

Distortions could also be caused by the current exposure of options market makers who may not be interested in adding risk at the current level of implied volatility.

By measuring the put/call open interest for each expiry, one can get a better glimpse of professional investors' bets, and both the July and August expiries are favoring bullish positions. 

A 25% delta skew by itself should not be interpreted as a bearish indicator, so be wary of those who suggest it is. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision

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