CRYPTO

There are 3 reasons why Bitcoin could go down to স্থানীয় 56.5K locally


The first rule of Bitcoin (BTC) trading should be “expect the unexpected.” In the past year alone, there have been five incidents of daily gains of 20% or more, as well as 18% drawdowns on five intradays. Honestly, the volatility of the last 3-months was relatively low compared to the recent peaks.

Bitcoin is a historic 90-day annual volatility. Source: Tradingview

Whether he is a multi-million dollar institutional fund manager or a retail investor, new traders in Bitcoin are often mesmerized by the 19% correction after the local peak. Even more shocking to many is the current $ 13,360 correction from November 10 to the all-time high of $ 69,000 in nine days.

Negative measures do not trigger anxious-raising liquidity

Cryptocurrency traders are notorious for high-leverage trading and the long (buy) Bitcoin futures contract worth about $ 600 million has been canceled in the last 4 days alone. This may sound like a decent enough number, but it represents less than 2% of the total BTC futures market.

Bitcoin Future Aggregate Open Interest. Source: Coinglass.com

The first evidence that a 19% drop to $ 56,000 has been spotted locally is the lack of a significant liquidation event despite sharp price changes. If there were extra buyers leverage during the game, which would be a sign of an unhealthy market, a sudden change in open interest, as seen on September 7.

Alternative market risk gauges were calm

To determine how worried professional traders are, investors should analyze 25% delta skew. This indicator provides a reliable perspective on the feeling of “fear and greed” by comparing similar call (buy) and put (sell) options side by side.

This metric will become positive when the premium for the neutral-to-bearish put option is higher than for the same-risk call options. This situation is generally considered a “fear” scenario. The opposite trend indicates bullishness or “greed”.

Bitcoin 30-Day Option 25% Delta Squeeze. Source: Laevitas.ch

Values ​​between negative 7% and positive 7% are considered neutral, so nothing out of the ordinary happened during the recent $ 56,000 support test. This index would have risen above 10% if pro traders and arbitrage traders had identified the high risk of market collapse.

Margin traders are still getting taller

Margin trading allows investors to borrow cryptocurrency to gain their trading position, which in turn increases returns. For example, someone might borrow Tether (USDT) and buy cryptocurrency by increasing their exposure. Bitcoin borrowers, on the other hand, can make it smaller because they bet on lower prices.

Unlike futures contracts, the balance between margin longs and shorts does not always match.

OKEx USDT / BTC Margin Loan Ratio. Source: OKEx

The chart above shows that traders have been borrowing more USDT recently, as the ratio has risen from 7 on November 10 to the current 13. The data tends to be bullish as the index favors borrowing 13 times more stablecoin, so it may reflect their positive exposure to bitcoin prices.

All of the above indicators show resilience in the face of recent BTC price declines. As mentioned earlier, something could happen in crypto, but derivative data indicates that $ 56,000 was below local.

Opinions and opinions expressed here are only theirs Author And does not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should do your own research when making decisions.