Bitcoin (BTC) price has given back some of its recent gains this week, but multiple data points suggest that $30,000 should act as support going forward.
In the 15 days to July 7, the bitcoin price has remained within a tight 4.3% range. Despite being close to the range of $29,895 to $31,165, investor sentiment was heavily impacted by its failure to break above $31,400 on July 6.
The tendency of traders to overreact to short-term price movements, rather than Bitcoin’s 82% year-to-date gain, may be partially responsible for the short-term correction. The same rationale applies to events related to other cryptocurrencies.
The question that investors are most concerned about is whether the recent price increase was driven solely by multiple spot bitcoin exchange-traded fund (ETF) requests.
Other pressing developments include the departure of Binance Chief Strategy Officer Patrick Hillmann and other senior compliance officers from the exchange on July 6, reportedly over CEO Changpeng Zhao’s response to the DOJ investigation. On June 29, the cryptocurrency exchange also notified users that its euro bank payment gateway will cease service in September, potentially stopping deposits and withdrawals via SEPA bank transfers.
That same week, the U.S. Treasury curve reached its worst inversion since 1981 on July 3, reflecting a 2-year yield of 4.94% and a 10-year yield of 3.86%, contrary to expectations for longer-dated bonds . This phenomenon has preceded past recessions and is therefore closely watched by investors.
All of these events could have some impact on Bitcoin price and investor sentiment, both topics we will explore in more depth below.
Traders Perform Strong in Margin, Options and Futures Markets
The OKX margin lending metric based on the stablecoin/BTC ratio has risen steadily from 20x in favor of bulls on July 1 to its current 29x on July 7, indicating growing confidence among traders to use margin lending. However, it remains within a neutral-to-bullish range, below the historical 30x threshold associated with excessive optimism.
Aside from leaving room for further bullish leverage, the indicator shows no sign of potential stress in the margin market in the event of a sudden correction in Bitcoin’s price.
Traders are not buying protective puts or adding to short positions
Traders can also gauge market sentiment by gauging whether more activity is through calls (buying) options or puts (selling) options. The put-to-call ratio is 0.70, indicating that put option open interest lags more bullish calls and is therefore bullish. In contrast, an indicator of 1.40 favors put options and can be considered bearish.
The put-to-call ratio for Bitcoin options volume has remained below 1.0 for the past three days, indicating a preference for neutral to bullish calls. Importantly, despite Bitcoin’s brief price correction to $29,750 on July 7, there was no significant surge in demand for protective put options.
Top traders’ net long-short ratios exclude external factors that may only affect the options market. There are occasional differences in methodology between exchanges, so viewers should focus on changes rather than absolute numbers.
The long-short ratio of top OKX traders rose from 0.52 on July 3 to 1.68 on July 7, indicating strong demand for leveraged long positions despite Bitcoin’s failure to breach $31,000. On Binance, the indicator fell from 1.52 on July 3 to 1.39 on July 7, still above the past 30-day average of 1.33, suggesting a neutral reading.
related: Bitcoin Mining Stocks Outperform BTC in 2023, But On-Chain Data Suggests May Stall
Bears face tough times given expectations for potential ETF approvals
Natalie Brunell, an award-winning TV journalist, podcast host, and educator in the bitcoin space, told Cointelegraph how institutional investors are now taking cryptocurrencies as an asset class more seriously As can be seen in the currency ETF documents, including some of the world’s largest asset fund management companies.
BlackRock CEO Larry Fink (Larry Fink) also said in a speech on Fox Business Channel on July 5 that the role of Bitcoin is mainly “digital gold”, suggesting that US regulators consider how spot-based ETFs can be used. Democratize finance. Fink suggested that investors could turn to bitcoin as a hedge against inflation or the devaluation of certain currencies.
So, from a more macro perspective, those who question whether Bitcoin is ready to adjust after a rally fueled by ETF hype, the resilience of traders’ bullish convictions, and the lack of over-optimism in BTC margins need to relax.
Bitcoin options and futures markets suggest that challenging times are ahead for Bitcoin bears and those who expect a sharp price correction simply due to regulatory and recession fears.
This article is for general informational purposes only and is not intended and should not be construed as legal or investment advice. The views, ideas and opinions expressed here are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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