CRYPTO

Bitcoin price puts pressure on bear as it reconsiders 41K ‘falling knife’ zone


“Don’t fight the trend” is an old proverb in the market, and there are other forms of the sentence such as “never hold a falling knife”. The bottom line is that traders should not try to predict the return of the trend, or worse, try to improve their average price while losing money.

It doesn’t really matter if someone is trading soy futures, silver, stocks or cryptocurrencies. Markets usually run in cycles, which can last from a few days to several years. In the case of Bitcoin (BTC), it is difficult for anyone looking at the chart below to support a bullish case.

Bitcoin price in USD at Coinbase. Source: Tradingview

In the last 25 days, every attempt to break the landing channel has been abruptly interrupted. Curiously, the trend sub-indicates পর্যন্ত 40,000 until mid-October, which could be the deadline for a decision by the US Securities and Exchange Commission on ProShares Bitcoin ETF (October 18) and Invesco Bitcoin ETF (October 19).

According to CoinShares Weekly Report, the recent price move has prompted institutional investors to enter the sixth consecutive week of inflows. Between September 20 and September 24 there was a flow of about 100 100 million.

Experienced traders claim that করার 43,600 support needs to be recovered to re-launch Bitcoin. Meanwhile, on-chain data points to heavier savings, as growing exchange supply has been impressive.

The everlasting future shows traders being neutral to be tolerant

In order to determine the attitude of investors, the rate of funds in permanent contracts should be analyzed as these are instruments of choice for retailers. Unlike monthly contracts, permanent futures (reverse exchange) trade at a price similar to regular spot exchanges.

Funding rates are automatically charged every eight hours from Long (buyers) when more leverage is claimed. However, when the situation is reversed, and the shorts (sellers) have excess leverage, the fund rate becomes negative, and they become fee payers.

Bitcoin has a permanent future 8-hour fund rate. Source: Bybt.com

In a ‘neutral’ situation Leverage Longs pays a small fee, swinging from 0% to 0.03% every 8-hour period, equivalent to 0.6% per week. Nevertheless, the chart above shows a slightly bearish trend since September 13, when the fund rate was last seen above the 0.03% threshold.

Call-to-ratio is also in favor of bulls, but the trend has changed

Unlike futures contracts, options are divided into two parts. Call (purchase) options allow the buyer to acquire Bitcoin at a fixed price on the expiration date. Generally speaking, these are used in either neutral arbitration business or bullish strategies.

Meanwhile, put (sell) options are usually used as protection against negative price changes.

To understand how these rival forces are balanced, one should compare the calls and keep the options open.

Bitcoin option open interest put-to-call ratio. Source: Laevitas.ch

The index reached below 0.47 on Aug. 2, reflecting the 50,000 BTC protective pot against the 104k BTC call (buy) option. Nevertheless, the gap is narrowing as the use of the neutral-to-bearish put agreement begins to receive traction after the September 24 monthly expiration.

According to Bitcoin futures and options markets, it may seem premature to call it a ‘bearish’ period, but the last two weeks have seen absolutely no signs of a rally from the derivatives index. It turns out that bull bulls are sticking to the ETF deadline which acts as a trigger to break the current market structure.

The opinions and opinions expressed here are only their opinions Author And don’t necessarily reflect Cointelegraph’s opinion. Every investment and trading move involves risk. You should do your own research when making decisions.