Bitcoin has stalled, but because of this, professional traders are still expecting $ 80,000 through January
Choosing a timeframe for technical analysis is always a sensitive issue, but the rule of thumb is that the longer the trend, the higher the chances of winning. For example, those who analyze the 3-day Bitcoin (BTC) chart will undeniably identify an ascending channel pattern that began in late June.
Bitcoin price in USD on FTX. Source: Tradingview
Bears will always find ways to justify their views, too, despite Bitcoin hitting new all-time highs after US consumer prices surge to 6.2%, the biggest surge in inflation in 30 years.
However, data from on-chain analytics firm Glassnode shows that long-term investors have stopped net accumulation and are now diversifying into altcoins. According to analyst Willian Clemente, the latest net sale for this class of investors was the first in six months and signaled a “sell on strength”.
It should be emphasized that the Bitcoin network was updated on November 14th to improve the scripting and privacy functions. From a retail perspective, this creates a potential “sell the news” event as the improvement was largely expected by the community.
Data shows that professional traders are neutral to bullish
To understand how bullish or bearish professional traders tend to be, one should analyze the futures base rate. This indicator is often referred to as the futures premium and measures the difference between longer-term futures contracts and the current spot market level.
In healthy markets, an annual premium of 5 to 15% is expected, known as contango. This price difference is caused by sellers charging more money in order to withhold settlement longer.
Bitcoin 3 Month Futures Base Rate. Source: Laevitas.ch
Note the increase to 20% on November 9th as Bitcoin accumulated 14% gains in 3 days. That brief period of over-optimism withdrew when BTC corrected 9% from its all-time high of $ 69,100 on November 10th.
Currently, the base indicator stands at a healthy 12%, which signals the confidence of these traders.
Options traders are not that bullish
In order to rule out external effects specific to the futures instrument, one should also analyze options markets.
The 25% delta skew compares similar call (buy) and put (sell) options. The metric becomes positive when fear prevails, as the premium for protective put options is higher than for similar risk call options.
The opposite is true when greed is the prevailing sentiment, which causes the 25% delta skew indicator to shift into negative territory.
Deribit BTC Options 25% Delta Skew. Source: Laevitas.ch
A skew indicator between -8% (greed) and + 8% (fear) is considered neutral. September 29th was the last time the indicator moved outside this range and hit + 10%. Oddly enough, that day marked the end of a 23-day bear move that took Bitcoin from $ 52,700 to $ 41,000 on September 6th.
The current neutral delta skew of 25% could be interpreted as “half a glass”, since professional traders are somehow unimpressed by the 95% profit since the beginning of the year.
The data shows that there is room for additional leverage from Bitcoin buyers which, ideally, would result in the price continuing to trade within the ascending channel launched in late June.
The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph. Every investment and trading movement involves risks. You should do your own research when making a decision.