Bitcoin (Bitcoin) Prices are still down 4.4% from the August 23 high of $50,500, causing some traders to question whether the local top marks the end of the recent 34-day bull market.
Even in the current adjustment, the derivatives data and professional investor operations have not sent any bearish signals.
On August 24, the well-known technical analyst John Bollinger suggested Bitcoin Prices may be pushed down in short term. A pseudonymous market analyst named “CryptoHamster” shared a similar bearish outlook based on the analysis of a technical model called an ascending channel.
The bad news from exchange supervision may also weaken investors’ interest. This week the UK Financial Conduct Authority (FCA) issued a Supervision notice Oppose Binance Exchange.
According to this week’s regulatory action, the exchange was required to cancel its real-time advertising and promotional activities on the Binance website and social media.
A bullish trend can be seen in the futures market
To assess whether professional traders have become pessimistic, analysts should monitor futures premiums, also known as “basis spreads.” This indicator measures the price gap between the futures price and the regular spot market.
In a healthy market, the annualized premium for 1-month contracts should be 6% to 14%, because sellers demand higher prices to delay settlement, which creates price differences.
Note how this indicator improved from a neutral to bearish annualized premium of 4% on August 19 to a healthier 9% level. This indicates that the indicator is moving in the opposite direction to the area, which will be considered bearish.
Top traders still optimistic about long-short ratios
In order to effectively measure the positioning of professional traders, investors should monitor the long-short ratios of top traders on leading cryptocurrency exchanges. This indicator provides a broader view of the effective net position of traders by collecting data from multiple markets.
It is worth noting that exchanges collect data from top traders in different ways, because there are multiple ways to measure a client’s net exposure. Therefore, any comparison between different suppliers should be based on percentage changes rather than absolute numbers.
Both OKEx and Huobi showed an increase in the long-short ratios of top traders, indicating that they either closed short positions or opened long positions, which is a bullish move. Binance is the only exception, as the indicator has declined, indicating a bit of pessimism, but the changes in the past few days are insignificant.
The options market is slightly bullish
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.
The chart above shows that there was some bearish sentiment before July 19, but the Bitcoin options market has turned neutral since then. In addition, there is no sign that professional traders are increasingly worried about a potential price drop because the 25% skewness indicator is still close to zero.
Despite worrying technical analysis and unstable regulatory conditions, both futures and options markets have shown investor confidence.
Therefore, at least according to the derivatives market, buy on dips.
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