Bitcoin accumulation continued on the spot market after the September 7 crash, even at consolidated prices. Since the supply on the exchanges for the top coin continued to decline, the focus now shifted to the futures market. The futures and options market in particular presented some interesting observations about market sentiment and expectations for the top coin.
This is what the market looks like
After a very brief period of negative funding rates during the sell-off, Eternal Markets returned to slightly positive funding rates, suggesting that traders are still expecting upward momentum in price. However, the bigger trend looked neutral or, as analyst Lex Moskovski said, the market could be “incredulous”.
In addition, the daily traded volume on the futures market remained comparatively low after the flash crash, although the open interest (OI) began to rise after its low on September 10th. Open interest on all exchanges was approximately $ 8.57 billion as of September 17, which is less than the $ 9 billion recorded the day before.
Last week’s analysis by Ecoinometrics found that purely in terms of trading activity, it is not clear whether the trend of falling open interest and average daily volume has bottomed out. This despite the increased open interest after the flash crash. In fact, a look at the CME Bitcoin options market shows that sentiment has not yet returned to euphoric mode.
Is the market still bullish in the long term?
Although the price of BTC consolidated in the spot market, options traders on the king coin appeared to be optimistic over the long term. Notably, Strike’s OI presented nearly 10,000 call contracts for $ 50,000 and about 9,000 call contracts for $ 60,000 and $ 90,000, respectively.
Those were good numbers for a market, especially in the consolidation of the spot markets. Furthermore, even the spread of implied volatility to realized volatility appeared to be at its highest level of nearly 1%, a level last seen around May 26th market changes. What was worrying was the fact that this large difference between IV and RV occurred while prices were much lower than the May peaks.
Where is BTC headed?
With prices consolidating, the short liquidations hit an all-time low for all exchanges, meaning the market was still in a dilemma about the BTC price spike. Additionally, retailers have been most bullish on Bitcoin in the past, but now the net amount of longs held by retail crowd still remains at the 2020 baseline, which is still 50% less than the January high as Ecoinometrics found.
While the above isn’t all bearish, they haven’t jumped back on trend either. However, the options OI change for September 21 is almost 357 DBT for $ 50,000 BTC, which means the market is expecting an upward move. But the weekends were tough for BTC. In order for Bitcoin to take some big strides in the coming week, it needs to thwart the weekend without losing prices.