Bitcoin (BTC) does not appear to have the strength to retest the all-time high of $ 67,000 it hit on October 20th, and this is causing investors to wonder whether or not the bullish moment has faded. Even when price faces these hurdles, it is premature to label the test of the USD 58,000 support level as the beginning of a descending channel.
Bitcoin price in USD at Coinbase. Source: TradingView
One of the factors limiting the rally is regulatory uncertainty in the US. Anne Dates, partner in law enforcement and investigative practice at Bracewell LLP and former chief attorney at the Commodities Futures Trading Commission (CFTC), said there are “no easy answers” for the agency to have clear rules.
On the other hand, increasing adoption has put pressure on traditional banks to look for deals on cryptocurrency products. For example, large Russian private bank Tinkoff, owner of a large online brokerage service, is studying crypto-related investment services, although the Bank of Russia is holding back such launches.
This week, Coinbase Exchange took the top spot as the most downloaded app for the United States Apple Store, which is overwhelming. Coinbase has beaten tech giants like TikTok, YouTube, and Instagram and that’s no small feat. Coinbase was first listed on the App Store in 2014 and was the most popular download in the US in 2017 and May 2021.
Professional traders stumbled but are bullish again
To determine how bullish or bearish professional traders are, one should monitor the futures premium – also known as the “base rate”.
The indicator measures the difference between longer-term futures contracts and the current price on the spot market exchanges. In healthy markets, also known as contango, an annualized premium of 5 to 15% is expected.
This price gap is caused by participants charging more money in order to withhold settlement longer, and a red alert appears when this indicator fades or turns negative, known as “backing up”.
Bitcoin 3 Month Futures Base Rate. Source: Laevitas.ch
Notice how the sharp drop caused by the $ 58,000 resistance test on October 27th caused the annualized futures premium to hit its lowest level in three weeks. Nevertheless, the indicator recovered well to the current 17%, which signals a moderate upward trend.
To confirm whether this move was specific to this instrument, one should also analyze the options markets.
The 25% delta skew compares similar call (buy) and put (sell) options and turns positive when “fear” prevails. This situation reflects the higher costs of the protective put options than comparable risk call options.
The opposite movement is true when market makers are bullish, which causes the 25% Delta Skew indicator to shift into negative territory. Readings between minus 8% and plus 8% are usually considered neutral.
Deribit Bitcoin Options 25% Delta Skew. Source: laevitas.ch
The 25% delta skew has been in the neutral zone since September 30th. The latest low on October 25th was minus 6%, not enough to be considered a moderate uptrend. However, even Bitcoin’s 12.5% correction from $ 66,600 on October 21st to $ 58,200 on October 28th wasn’t enough to scare professional traders.
Although there were no signs of bearish in the Bitcoin derivatives market, the bulls should start worrying about the potential descending channel starting Oct. 19.
There are currently no signs of stress from professional traders, so a correction after a 63% rally in three weeks that led to an all-time high of $ 67,000 on October 20th shouldn’t be a problem.
The views and opinions expressed herein are solely those of the author 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.