$29K Bitcoin is closer than you might expect, according to derivatives data
Bitcoin (BTC) price continues to battle the $24,000 resistance and the price rejected there on August 10, but the rejection was not enough to knock the price out of the 52-day ascending channel. The channel has a support at $22,500 and this bullish formation suggests that the BTC price will eventually reach the $29,000 level in early October.
Bitcoin derivatives data shows a lack of interest from leveraged longs (bulls), but at the same time higher odds of a surprise crash are not priced in. Curiously, the last Bitcoin decline on August 9 was accompanied by a negative development from US listed stocks.
On August 8, chip and video graphics card maker Nvidia Corp ( NVDA ) announced that its Q2 sales will be down 19% compared to the previous quarter. In addition, the US Senate passed a bill on August 6 that could negatively affect the company’s earnings. Despite freeing up $430 billion to fund “climate, health care and taxes,” the provision would impose a 1% tax on share buybacks from publicly traded companies.
The high correlation between traditional assets and cryptocurrencies remains a major concern for some investors. Investors should not get ahead of themselves even if inflationary pressures ease, because the US FED is monitoring employment data very closely. The latest reading showed unemployment at 3.5%, typical of overheated markets, forcing the monetary authority to continue raising interest rates and withdraw stimulus debt purchase programs.
Reducing risk positions should be the norm until investors clearly indicate that the US Federal Reserve is closer to easing its tighter monetary policy. This is precisely why crypto traders follow macroeconomic numbers so closely.
Currently, Bitcoin lacks the strength to break the $24,000 resistance, but traders should study derivatives to gauge professional investor sentiment.
Bitcoin derivatives calculations are neutral-to-bearish
Bitcoin futures annualized premium measures the difference between long-term futures contracts and current spot market levels. The indicator should run between 4% and 8% to compensate traders for “locking in” the money until the contract expires. Thus, levels below 2% are extremely bearish, while figures above 10% indicate excessive optimism.
The chart above shows that this metric fell below 4% on June 1st, reflecting traders’ lack of demand for leveraged long (bull) positions. However, the current reading of 2% is not particularly worrying, given that BTC is down 51% year-to-date.
To rule out externalities specific to the futures instrument, traders must also analyze Bitcoin options markets. 25% delta bias is a clear sign when arbitrage tables and market makers are charging too much for upside or downside protection.
Related: Bitcoin Price Sees $24K, Ethereum Hits 2-Month High As US Inflation Shrinks
If these traders fear a Bitcoin price crash, the bias indicator will move above 12%. On the other hand, generalized tension reflects a negative bias of 12%.
Data shows that the bias indicator has been between 3% and 5% since August 5, which is considered a neutral range. Options traders are no longer overloading for downside protection, which means they may lack excitement, but at least they have abandoned the “fear” of recent months.
Considering Bitcoin’s current ascending channel pattern, Bitcoin investors probably shouldn’t worry too much about the lack of buying demand according to futures market data.
Of course, there is healthy skepticism reflected in derivatives calculations, but the path to a $29,000 BTC price remains clear as long as inflation and employment statistics are under control.
The views and opinions expressed herein are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trade involves risk. You should do your own research when making a decision
