Bitcoin (Bitcoin) has hovered above $20,000 for the past nine days, but deteriorating conditions from the traditional market have left traders wondering if the support will hold.
On November 3, the Bank of England raised interest rates by 75 basis points to 3%, the biggest increase since 1989. The risk of a prolonged recession also increased as the monetary policy committee struggled to contain inflationary pressures.
The UK Monetary Authority said its latest growth and inflation forecasts indicated a “very challenging” outlook for the economy. It’s putting pressure on,” he added, putting negative pressure on the jobs report.
The US Federal Reserve also interest rate hike Confirmation of a conservative approach by the central bank could partly explain why Bitcoin failed to break out of the $21,000 resistance on Oct. 29 and then fell. 4.5%.
To get a better idea of how professional traders are positioned in the current market conditions, let’s take a look at derivatives indicators.
Options traders aren’t particularly bullish
A delta skew of 25% indicates that market makers and arbitrage desks are overcharging for upside or downside protection.
In a bear market, the skew indicator exceeds 10% as options investors set higher odds for a decline. On the other hand, in a bullish market, skew indicators tend to be below -10%, meaning bearish put options are discounted.
Delta skew was above the 10% threshold until October 26th. A more balanced situation emerged, but his $21,000 resistance test on Oct. 29 wasn’t enough to instill confidence in his options traders.
Currently, the 60-day delta skew is 6%, so whales and market makers are setting similar odds for upside and downside. However, as BTC approaches the $20,000 support, other data show less confidence.
Leveraged buyers ignored recent gains
The long-to-short indicator excludes externalities that may have only impacted the options market. We also collect data from our exchange customers’ spot, perpetual and quarterly futures contract positions to give you a better idea of how professional traders are positioned.
Readers should monitor changes rather than absolute numbers, as there are occasional methodological discrepancies between different exchanges.
Bitcoin rose 9% from Oct. 22 to Oct. 29, but professional traders slightly deleveraged their long positions, according to the long-to-short indicator.
For example, the ratio of Binance traders has improved somewhat from a start of 1.25, but has since fallen below the starting level of 1.22. Huobi, on the other hand, showed a slight decrease in the long-to-short ratio as he moved from 1.03 to 1.00 in his seven days to Oct. 29.
On cryptocurrency exchange OKX, the metric fell slightly from 1.01 on October 22nd to 0.94 on October 29th. On average, this meant that traders were not confident enough to add leverage to their bullish positions.
Related: Robinhood Isn’t Giving Up On Crypto Despite Q3 Crypto Earnings Sliding 12%
$20,000 Support Is Weak, But Traders Are Not Bearish
These two derivatives indicators — options skew and long to short — see Bitcoin price corrections of 4.5% since the $21,000 test on Oct. 29 supported by moderate levels of mistrust from leveraged buyers. suggesting that
A more optimistic sentiment could have pushed the 60-day delta skew into the negative range, pushing the long-to-short ratio to higher levels. It’s important to note that even professional traders can misinterpret the market, but current readings from the derivatives market favor weak support at $20,000.
On an optimistic note, there are no signs that professional traders are expecting a negative move. Basically, it’s been 50 days since Bitcoin last traded above his $22,000 level, so nothing will change when the price returns to his $19,000 level.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. All investment and trading movements involve risk. You should do your own research when making a decision.
