Bitcoin Price Makes A Comeback As 3 Indicators Reflect BTC Strength

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The price of Bitcoin (BTC) is still down 4.4% from its August 23 high at $ 50,500, leading some traders to question whether the local high marks the end of the recent long 34 day bull run.

Even with the current correction, derivative data and professional investor moves are showing no bearish signals.

Bitcoin price in USD on Coinbase. Source: TradingView

On August 24, prominent technical analyst John Bollinger suggested that the price of Bitcoin may decline in the near term. A pseudonymous market analyst called “CryptoHamster” shared a similar bearish outlook based on analysis of a technical pattern called an ascending channel.

Bearish news from currency regulations may also have dampened investor interest, and this week the UK’s Financial Conduct Authority (FCA) issued a watchdog against Binance Exchange.

According to this week’s regulatory action, the exchange has been asked to remove its ads and promotions live on Binance’s website and social media.

An uptrend can be seen in the futures markets

To assess whether professional traders have become pessimistic, analysts should watch the term premium, also known as “base”. This indicator measures the price difference between futures prices and the regular spot market.

The one-month contract is expected to trade at an annualized premium of 6% to 14% in healthy markets as sellers demand a higher price to postpone settlement, creating a price difference.

Huobi term base at 1 month. Source: bias

Notice how the indicator went from a neutral to bearish annualized premium of 4% on August 19 to a healthier level of 9%. This shows that the metric is moving in the opposite direction of the zone, which would be considered bearish.

The long / short ratio of top traders is still optimistic

To effectively measure the positioning of professional traders, investors should monitor the long / short ratio of top traders on major crypto exchanges. This metric provides a broader view of the effective net position of traders by collecting data across multiple markets.

Best long / short ratio BTC traders. Source: Bybt.com

It should be noted that exchanges collect data on top traders differently, as there are several ways to measure a client’s net exposure. Therefore, any comparison between different vendors should be made on percentage changes instead of absolute numbers.

OKEx and Huobi posted an increase in the long / short ratio of top traders, indicating that they either closed short positions or opened long positions, which is a bullish move. Binance was the only exception as the indicator fell, indicating some pessimism, but the variation over the past two days has been insignificant.

Options markets are slightly bullish

The 25% delta skew compares similar buy (buy) and sell (sell) options side by side. It will turn positive when the premium of protective puts is higher than that of similar risk calls.

The reverse is true when market makers are bullish, causing the 25% delta asymmetry indicator to enter the negative range.

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

The chart above shows that there had been some decline before July 19, but the Bitcoin options markets have turned neutral since then. Moreover, there is no indication that professional traders are increasingly worried about a potential drop in prices, as the 25% asymmetry indicator remains close to zero.

Futures and options markets show investor confidence despite worrying technical analysis and fragile regulatory scenario.

Therefore, at least according to the derivatives markets, the dips are for the buying.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trade move involves risk. You should do your own research before making a decision.

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