Bitcoin (BTC) traders might feel even more euphoric after the recent 35% rally, but the data suggests the bears aren’t too worried as a similar breakout occurred in mid-July and the price didn’t. failed to maintain the $ 40,000 support.
To understand how bullish investors are this time around, let’s take the derivatives data apart and take a look at the futures premium and option asymmetry. Typically, these indicators reveal how professional traders assess the odds of a potential retracement at $ 36,000.
While the pattern isn’t exactly similar, Bitcoin crashed to $ 31,000 on June 8 and rebounded to $ 41,000 six days later. The 32% rally sparked a selloff of $ 1.4 billion BTC short-term contracts that spread over the week. The bears clearly weren’t expecting this move, but in less than three days Bitcoin was trading below $ 38,000 and started a downtrend.
Therefore, the bulls have reason to doubt the sustainability of the current rally, given that there has been no significant change to justify the $ 40,000 level. Additionally, the price could be removed by the ongoing FUD regarding the exodus of miners from China and Binance moving to seek regulatory approval.
The term premium did not show a significant recovery
One of the best measures of optimism for professional traders is the futures market premium, as it measures the spread between monthly contracts and current spot market levels. In healthy markets, an annualized premium of 5-15% is expected. However, a backlash scenario occurs during bearish markets and the indicator fades or turns negative.
According to the chart above, the one-month futures contract failed to recover an annualized premium above 5%. Some backlash periods have occurred over the past month, although the current level is considered neutral.
To exclude the externalities specific to the futures instrument, it is also necessary to analyze the options markets.
Related: $ 60,000 is now more likely for Bitcoin than $ 20,000, says Bloomberg senior strategist
Whenever market makers and professional traders go bullish, they will demand a higher premium on the call options. Such a trend will result in a negative delta bias indicator of 25%.
On the other hand, whenever the downside protection is more expensive, the bias indicator will turn positive.
‘Fear’ is irrelevant, but neutrality defines today’s market
When the figure oscillates between minus 10% and positive 10%, the indicator is considered neutral. The 25% delta asymmetry indicator had reported “fear” between May 14 and July 24.
However, even the recent rally to $ 40,000 was not enough to tip sentiment towards “greed” as the indicator remains neutral at minus 4%.
According to the two measures of derivatives, there is absolutely no sign of optimism from professional traders. The 35% price hike may have wiped out a recent scare pattern, but it wasn’t enough to turn sentiment around.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move comes with risk, you should do your own research before making a decision.