The price of Bitcoin (BTC) has fallen 10% this week and while it can be scary for day traders, the 3-day chart shows that the downward movement did little to dent the current structure of the market. market.
This is especially true when you consider that the $ 12,500 level has not been hit for more than 13 months. Currently, analysts are setting price targets of $ 16,000 in part due to a CME spread and the expectation of rising inflation in the United States.
3 Day Bitcoin Chart, USD. Source: TradingView
The chart above illustrates how insignificant the last ten days of negative performance is from a broader perspective. Bitcoin (BTC) has accumulated a 48% gain since the start of the year and there is no evidence of weakness. The largest daily decline in the past five months was -6.4% on August 2.
Holders are not surprised by the recent volatility
As short-term traders wonder if the August 28 CME expiration of futures and options caused the decline seen in recent days, on-chain data reveals that holders have become more robust than ever.
One-year UTXO bitcoin unspent. Source: LookIntoBitcoin
63% of UTXOs have not been affected for over a year, which is unprecedented. These holders faced a 53% drop in the thirty days leading up to March 13, but even the Black Thursday crash failed to prompt them to move their BTC.
Options markets show few signs of stress
Options markets provide real-time sentiment for major traders and arbitrage trading bureaus. The 25% delta bias is the primary indicator of ‘fear and greed’ for options markets, as they measure the cost of protecting against an unfavorable price move versus positive protection.
Bitcoin options 3 months delta asymmetry of 25%. Source: Skew
These put options, which give buyers the option to sell Bitcoin at a fixed price at a later date, are currently 6% more expensive than a similar call option. While the instrument is not as bullish as the 13% price difference measured earlier this month, a 25% asymmetric delta indicator can still be interpreted as bullish.
The best traders stay sharp
Some exchanges provide data on the net long-short positioning of top traders. This is a great way to assess whether professional traders are trending up or down.
Even though individual futures markets are balanced between buyers (long) and short (short), the best traders usually have their risk spread across multiple markets.
By aggregating the positions of these clients, exchanges can determine the net exposure of top traders.
Top traders longs / shorts. Source: Binance, OKEx et Cointelegraph
Top Binance and OKEx traders have been bullish since July 27. In itself, this is an impressive achievement, considering the sharp drop in the price of Bitcoin by $ 1,500 on August 2.
Less liquidations on the futures markets
By measuring futures contract closeouts during negative price movements, one can estimate the vulnerability of (long) buyers. Keep in mind that there has been 9% or more intraday price movement on four occasions in the past three months.
Bitcoin (USD). Source: Bitstamp et Cointelegraph
If these traders had been caught off guard with 10x or more leverage, they would have been forcibly liquidated a long time ago. Therefore, the open term interest would decrease considerably.
Total open interest of futures contracts on BTC, USD. Source: Bybit & Cointelegraph
Total open interest on BTC futures has risen 166% in the past five months to $ 4.8 billion. These data provide further evidence that whales are not liquidated by the recent negative 10% move.
Every bull run has occasional fixes
There will surely be some selling pressure as Bitcoin (BTC) consolidates after the 28% rally that occurred in the last two weeks of July. Even during the massive 240% 3-month bull run that began in early April 2019, there were four opportunities for short-term corrections of 9% or more.
Nonetheless, the on-chain data and sentiment of top traders via derivatives remains bullish. This indicates that the market will tend to move neutrally or upward over the next few weeks.
The opinions 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 need to do your own research when making a decision.