The momentum that drove Bitcoin above $ 50,000 on the morning of October 5 continued throughout the day after the bulls took control of the market and pushed BTC price near $ 51,900 .
Data from TradingView shows that the bulls are continuing to rally after a brief period of consolidation, and many analysts are watching to see if BTC holds $ 50,000 as support.
BTC / USDT 4-hour chart. Source: TradingView
Since hitting $ 40,885 on September 29, the price of BTC has risen 26.8%, raising hopes of closing the year above $ 100,000, which was the price target for the remainder of the year.
Cows still have to claim $ 55,000
Tuesday’s price action was a welcome sight for David Lifchitz, managing partner and chief investment officer at ExoAlpha, who viewed the 10% increase on October 1st as a short squeeze with “nothing” for many players looking to capitalize on an illiquid market environment. “
Despite the upward move, Lifchitz warned that BTC was not yet in danger, despite “technical indicators pointing to an upward move, but they were fooled by the top of the day.” October 1.
“At this point there are two options: either the bulls come back into the game and push BTC above $ 55,000 and we can expect to hit an all-time high of $ 64,000 shortly thereafter, or they stay on a move of $ 44,000 -Dollar to $ 48,000 in just 2 minutes and may not have enough firepower to break through $ 53,000- $ 55,000. BTC could then return to the middle of the $ 40,000 to $ 50,000 range that has existed for the past 5 months. “
The crypto market is up 12.5% in the past seven days and has reached a market cap of $ 2.44 trillion. However, this move does not seem to instill confidence as the same level was tested 16 days before the 27% retracement.
Regulation appears to be a major factor that buyers are concerned about, as the U.S. House of Representatives is expected to vote on a $ 1 trillion infrastructure bill this month. In addition to determining who qualifies as a broker, the law will impose anti-money laundering (AML) and identity verification (KYC) requirements on many types of cryptocurrency transactions, which can also be detrimental to DeFi protocols.
The negative performance of the top 10 cryptocurrencies has had an impact on investor sentiment over the past 30 days. Because of this, it is important to measure more than the nominal price of Bitcoin. Traders should also analyze bitcoin derivatives such as the futures market premium and option deviation.
Futures premium suggests that traders are somewhat optimistic
The base rate is also generally referred to as the futures contract premium and measures the difference between a longer-term futures contract and the current spot market.
In healthy markets, an annual premium of 5 to 15% is expected, a situation known as contango. This difference is due to the fact that the seller asked more money to defer payment.
As described above, the annual premium of 9% is now neutral, but shows an improvement compared to a few weeks ago. This suggests that traders are cautiously bullish and leave room for further long leverage once confidence is fully restored.
Options traders exit “fear” mode
The 25% delta deviation compares the same call (buy) and put (sell) options. The index becomes positive when “fear” gets out of hand, as the put premium is higher than with similar risky call options.
The opposite happens when market makers are bullish, which causes the 25% delta deviation indicator to become negative. Results between -8% and + 8% are generally considered neutral.
It should be noted that Bitcoin options traders were “scared” on September 25th when the USD 41,000 support level was tested multiple times. However, there has been a drastic change since September 30th and the indicator is now in neutral territory.
In the current situation, both the futures basis and the 25% delta deviation option represent a typical “optimistic” scenario. This means that although Bitcoin has hit a 27-day high and above the USD 50,000 resistance, Buyers still have room for additional leverage before the indicators show signs of exaggeration.
The breakout level of $ 50,000 on the current meager data on derivatives is widely viewed as a weakness. However, given that the entire crypto cap remains in the same position as it was 30 days ago and the regulatory concerns have not subsided, there is nothing to worry about. Right now, neither the futures nor the options markets are showing any bearish signs.
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