Choosing a timeframe for technical analysis is always a difficult topic, but usually the longer the trend, the higher the odds. For example, if you analyze the 3-day Bitcoin (BTC) chart, you will see an ascending channel pattern that began in late June.
The bears will always find a way to justify their position as well, despite Bitcoin hitting an all-time high after US consumer prices rose to 6.2%, a spike in inflation.
However, data from online chain analyst Glassnode shows that long-term investors have stopped amassing wealth and are now diversifying into alternative currencies. According to analyst Willian Clemente, the latest net sale by this group of investors was the first in six months and signaled a “strong sales move”.
It’s worth noting that the Bitcoin network was updated on November 14th to improve scripting and privacy. From a retail point of view, this represents a potential “sell the news” event, as the improvement is largely expected by the community.
The data shows that professional traders are upwardly neutral
To understand whether professional traders are following an upward or downward trend, one should analyze the underlying price of the futures contract. This indicator is often referred to as the futures premium and measures the difference between a longer-term futures contract and the current spot market level.
In healthy markets, an annual premium of 5 to 15% is expected, a situation known as contango. This difference in price is due to sellers charging more money in order to withhold payments longer.
Note the increase to 20% on November 9th as Bitcoin made a 14% gain in 3 days. That brief period of over-optimism receded when BTC corrected 9% from its all-time high of $ 69,100 in November.
Currently the base indicator is stable at 12%, which shows the confidence of these traders.
Options traders are not as optimistic as
In order to exclude external factors specific to the futures instrument, one should also analyze the options markets.
The 25% delta deviation compares call (buy) and put (sell) options similarly. The metric becomes positive when fear prevails, as the premium to protect puts is higher than that of similar risky call options.
The opposite happens when greed is the prevailing sentiment, which causes the 25% delta deviation indicator to move into negative territory.
An indicator that deviates between -8% (greed) and + 8% (fear) is considered neutral. On September 29, the indicator moved outside this range for the last time, reaching + 10%. Oddly enough, that day marked the end of the 23-day bear movement that took Bitcoin from $ 52,700 to $ 41,000 on September 6th.
The current neutral delta deviation of 25% can be interpreted as a “half full glass”, since pro traders are somehow unimpressed by the 95% profit since the beginning of the year.
The data shows that there is room for additional leverage from Bitcoin buyers, ideally if the price continues to trade within the ascending channel that began in late June.
The views and opinions expressed here are solely those of author and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risks. You should do your own research when making a decision.