Bitcoin Moves: Options Market Indicate Bullish Price Outlook
This week, bitcoin is making its way upwards, albeit at an extremely slow pace. Yesterday, we went to nearly $9,500 but are currently trading around $9,411 in the green with just over $1.26 billion in ‘real’ trading volume.
The world’s leading cryptocurrency is currently challenging its long-standing trendline resistance that dates back to mid-December 2017 for the fifth time in the past six weeks.
Meanwhile, bitcoin options calls are trading at a premium to puts.
While calls give one the right to buy an underlying asset at a predetermined price on a particular date, puts are to sell an asset. And this data suggests “puts are less expensive.”
On paper, skew doesn’t really say anything about sentiment- simply that volatility should be higher if BTC rallies than if it falls.
In practice, maybe has some value given retail likes to use options for cheap leverage instead of sophisticated volatility plays
— Daniel Wasserman (@_dwasse) July 9, 2020
“The move higher by Bitcoin was accompanied by further widening of the contango structure, while in the options market, the short-term skew profile also dipped aggressively, indicating bullish price outlook,” said Denis Vinokourov of Bequant.
Bitcoin Margin Lending Ratio is also indicating bullish sentiment, as OKEx reports a dramatic surge from 1.45 to 4.4 since July. “However, an extremely high ratio can also imply a reversal signal according to historical data.”
Different indicators are supporting a big moving coming, but the market can go in either direction with the only concession that the growing network supports an upwards move.
A downside move was seen in November 2018 after volatility fell to such low levels. At that time, Bitcoin fell from $6,000 to find its bottom at $3,200 in December.
On the bright side, it doesn’t take much to take it to the moon, either. As back in late November 2017, when we were at the current price level, it only took 20 days for the digital asset to go to $19,000.
Comedians Getting Bitcoin
In the meantime, Bitcoin continues to attract new enthusiasts.
Australian comedian Jim Jefferies recently revealed on the episode of his podcast “I Don’t Know About That” that he has one Bitcoin, which he bought as “a bit of a laugh just on the Robinhood app just to see what this crypto is all about.”
But he hasn’t transferred it to a wallet, and cold storage is just putting the “wallet in the fridge.”
Earlier this month, comedian Bill Burr was persuaded by Bitcoin bull Anthony Pompliano to buy bitcoin.
“I’m getting Bitcoin! F — this s—!” said Burr on his podcast “Bill Bert” after Pomp explained how no one can print bitcoin, and it would be the world’s reserve currency in the next few decades because the US dollar won’t be able to keep this status.
“I’m calling it now. On July 1, 2020, Bill Burr and Bert Kreischer kicked off a historic 18-month Bitcoin bull market,” Pomp joked on Twitter.