Bitcoin derivatives data shows that professional traders ignored today’s $41,000 surge


Sometimes all bitcoins (Bitcoin) The need to draw 10% is a positive evaluation of people like Elon Musk.

In a statement issued by the company on May 12, it explained that Tesla’s CEO was accused of being the chief culprit of the recent economic downturn. No longer accept Bitcoin payments Due to environmental issues. Musk went on to say that he is studying other cryptocurrencies that need to reduce energy consumption by 99%.

However, on June 13, the situation was reversed because Musk assured the public that Tesla Did not sell any additional bitcoinsThe post also stated that once its Bitcoin mining relies on at least 50% of clean energy, electric car manufacturers will resume accepting BTC payments.

In a bear market, top traders act with caution

Although retail investors and algorithmic trading robots will act immediately when bullish or bearish signals and news appear, top traders tend to be more cautious. Those who have been in the crypto market for a long time know that in a bear market, good news may eventually be ignored or seriously underestimated.

On the other hand, during a bull market, even potentially negative news seems to have little effect. For example, on September 26, 2020, Kucoin was hacked for $150 million. The following week, October 1, the U.S. Commodity Futures Trading Commission Charge BitMEX for operating an unregistered trading platform And violation of anti-money laundering regulations.

Two weeks later, it was reported that the police questioned the founder of OKEx, Forcing exchanges to suspend crypto withdrawalsIf this series of negative news occurs when Bitcoin is flat or in a bearish phase, the price will undoubtedly stagnate during the bear market.

Coinbase’s Bitcoin price (in U.S. dollars) in September 2020. Source: TradingView

As shown above, Bitcoin hardly had any negative effects in late September and October 2020. In fact, by the end of November 2020, Bitcoin had risen by 74% in two months. This is the main reason why top traders tend to ignore positive news during a bear market, and vice versa.

The 3-month futures premium is neutral

Sellers of futures contracts usually demand a premium over conventional spot exchanges. This situation is not unique to the crypto market and occurs in every derivative market because in addition to exchange liquidity risks, sellers also postpone settlement, which leads to price increases.

In a healthy market, the 3-month futures premium (basis) is usually traded at an annualized premium of 5% to 15%. When futures trading prices are lower than regular spot trading prices, it signals short-term bearish sentiment.

Huobi 3-month Bitcoin futures basis.Source: Skew

As shown above, since May 20, the future basis has been below 11%, and it has entered the bearish zone many times when testing 5%. Current levels indicate that top traders are neutral.

Skew options no longer express fear

A delta skew of 25% compares similar call (buy) and put (sell) options side by side. When the premium of a protective put option is higher than that of a call option of similar risk, it will become positive.

When the market maker is bullish, the opposite is true, which causes the 25% delta skew indicator to enter a negative range.

Deribit Bitcoin options 25% delta skew. Source: laevitas.ch

The above chart confirms that top traders, including arbitrage tables and market markers, are currently uncomfortable with Bitcoin prices because of the higher premium for neutral to bearish put options. However, the current positive skewness of 7% is a far cry from the 20% exaggerated fear that appeared at the end of May.

There is no evidence in the derivatives market that top traders are excited about the recent rise of $40,000. On the bright side, leveraged buyers have room to increase their positions. Stronger rises usually occur when investors least expect it, and the current situation seems to be a perfect example.

The views and opinions expressed here only represent the views of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, and you should conduct your own research when making a decision.