On Monday, Bitcoin (BTC) dropped below the $30,000 mark once more, reaching its lowest price since late June in the $29,600 range.
By market capitalization, the most valuable cryptocurrency network in the world has now decreased by almost 6% from its last Thursday’s highs of over $31,800, which it had reached at a more than one-year high.
The announcement last week that a district court did not consider XRP to be a security, at least not in the context of Ripple’s sales of the token to financial institutions, sent the price of cryptocurrencies soaring.
However, profit-taking following this year’s extraordinary bitcoin surge (BTC was last up over 80% year-to-date) prevented BTC from firmly breaching to the north of its previous mid-$29,000 to $31,000ish range.
Concerns over the financial stability of Binance, the largest cryptocurrency exchange in the world, which was rumored to be considering laying off up to a third of its staff last week and to be reducing employee perks this week, have been cited by several experts as a potential factor in the downturn in mood.
The difficulties facing Binance show that the much-discussed « crypto winter » that caused a significant contraction for the sector in 2022 has not yet entirely thawed.
The fact that bitcoin is still finding solid support in the mid-$29,000 range and hasn’t yet broken strongly south of its 21-Day Moving Average, however, are both positive indicators that the bulls haven’t entirely ceded control just yet.
In fact, a number of additional indicators show that bulls are still looking for more gains.
These Metrics Indicate BTC Bulls Are Still Expecting Further Rise
The fact that investors are still paying more for Bitcoin options that pay out in case of additional upside suggests that the market for bitcoin options is still quite robust.
The 25% delta skew of bitcoin options expiring in 7, 30, 60, 90, and 180 days all remain at relatively high levels between 1 and 4, according to statistics provided by The Block, even though the price of bitcoin may be near one-month lows.
Indeed, the message from the options markets is that investors should expect a sustained crawl upward for bitcoin in the next months rather than dramatic short-term rallies, with the 180-day delta skew being the greatest at 4.
A 25% delta skew of below zero indicates that investors preferentially demand bullish Bitcoin call options over equal bearish put options by the fact that the former are trading at a premium.
The ratio of open interest in bitcoin put/call options, which is now 0.43, is likewise at low levels.
Investors prefer to possess call options (bets on the price increasing) over put options (bets on the price falling) when the ratio of open interest for put and call options is less than 1.
As demand for the two types of options diverges, the ratio is lowering, indicating an increase in positive sentiment.
Even while the short-term bullish momentum is continuing to wane, a sharp drop down beneath mid-$29,000 support and subsequent collapse back to the late May highs in the mid-$28,000s are both possible. However, the options market would be taken aback by such a move.
Things are relatively calm on the macro front in terms of possible volatility triggers for the week, with little tier 1 data coming out of the US this week aside from Thursday’s publication of June Retail Sales statistics.
Regulation, the XRP lawsuit, the crypto winter, and aspirations for institutional adoption in the wake of Wall Street giants’ spot bitcoin ETF applications from last month will all continue to be prominent themes in the cryptocurrency market.
