Bitcoin is Yet to Top Out, Says Derivatives Data
Throughout the previous few weeks, analysts noted that BTC was eventually looking for a local top. Bitcoin has been rejected at $10k price range three times in the past few months. The rejections led to people’s reconsideration of their bullish stance on Bitcoin because this level is important.
Market participants have been considering data from financial derivatives like futures and options to understand cryptocurrency price movements over the previous few months, as they keep providing crucial information.
According to derivatives data and simple technicals, Bitcoin has incurred an over 150 percent upsurge from its capitulation lows in March, but it is far from topping out.
A leading trader known as TrueCrypto28 on Twitter shared a chart showing BTC’s macro price action together with the BitMEX funding rate. Long positions pay short positions a fee called funding rate for the stabilization of market prices.
— Mr. Anderson (@TrueCrypto28) May 28, 2020
Hence, exceptionally high or low funding rates show that a side of the market is possibly overleveraged. According to the chart, BTC funding rate is not trending outstandingly high; hence, based on history, Bitcoin has an opportunity to rally.
Similarly, technical indicators say BTC is yet to attain a medium-term top. Based on an analyst’s (Alex Fiskum) explanation, many investors were neutral or shorted when Bitcoin moved from the $3ks to $10k due to skepticism.
Market sentiment and positioning showing this was a hated rally.
These indicators are not signaling any market peak as it did in each of our previous upper trendline tests. pic.twitter.com/4TAwQl3R6y
— Alex Fiskum (@AlexFiskum) May 13, 2020
SpartanBlack, a partner at The Spartan Group, responded to the chart shared by Fiskum, corroborating cryptocurrency investors’ neutrality:
Could agree more. Market positioning is still somewhat risk off. Look at the $BTC put-call skew, the 14D RSI, the crypto fear and greed index.
When this turns risk on, we are going to get a major move in price. https://t.co/xefapVxNc7
— SpartanBlack (@SpartanBlack_1) May 14, 2020
Despite the data showing BTC’s opportunity for a rally, there is a key barrier to surmount. A trader posted a chart showing clearly that there is Bitfinex order book barrier at $10k for BTC. Hence, if Bitcoin is rejected at $9.6k, there could be a correction back to the high-$8ks.
— Coiner-Yadox (@Yodaskk) May 27, 2020