The blockchain space is seeing some strengths despite the perceived market downturn. Perpetual forward funding rates for Bitcoin (BTC) and Ether (ETH) turned positive on major exchanges, showing bullish sentiment among derivatives traders. Additionally, Bitcoin began trading below its base price, marking previous market lows. In contrast, decentralized finance (DeFi) saw a 33% drop in total locked-in value in June, and crypto stocks delivered an average return of -42.7% on a monthly basis.
A battle is underway between bullish and bearish sentiments in different areas of the market. To help cryptocurrency traders navigate the battlefield, Cointelegraph Research recently launched its monthly “Investor Insights Report”. In the report, the research team analyzes the most important market events of the past month and the most critical data across various industry sectors. Researchers provide expert analysis and insights that can benefit serious players in the blockchain market.
Derivatives can provide a key indicator of the change in sentiment
Prior to June, there had been strong bearish sentiment in the market. An indicator of bearish and bullish sentiment is the distortion of the volatility of a market. The wider the asymmetry range, the more volatile it is, while narrower ranges suggest less volatility, implying greater confidence in the market. On June 18, the 25 delta bias in Bitcoin options peaked at 36%, the highest on record. Since then, some optimism has returned, bringing the bias down to 17%. This signals a strong belief that the cryptocurrency market will pick up in the coming months.
The premium long calls on Bitcoin and Ether indicate that traders are optimistic for the end of the year. However, solvency issues and the risk of contagion are still present in the market and in the minds of investors and regulators.
In side markets, traders can use bottlenecks to generate returns if Bitcoin remains limited. Bottlenecks involve writing put and call options at different strike prices. The idea of a bottleneck is as the name suggests: putting a put (a put option) and a call (a call option) below and above the current spot price. For example, if Bitcoin is at $ 20,000, you first sell a put at $ 15,000 down and a call at $ 30,000 and up. If they expire after one month, bonuses result in winning minus transaction fees.
Currently, option bias is steeply sloping, with an implied volatility spread of up to 10% between the $ 17,000 to $ 24,000 strike prices on Deribit and Chicago Mercantile Exchange. This indicates a good setup for a risk reversal involving a short sale at $ 17,000 and a long call at $ 24,000.
Is the bullish sentiment starting to repel the bears?
Bitcoin’s unrealized net loss hit its lowest level in three years, showing that its current market value is nearly 17% lower than its overall cost base. Historically, global lows formed when losses hit more than 25%. The descending moving averages and the relative strength index in the oversold zone indicate that the bears are in control.
However, for the first time since March 2020, Bitcoin has been trading below its mining cost base, a level that has historically marked global capitulations and lows in Bitcoin’s price. The unrealized profit / loss indicator is further evidence that the bulls could potentially outweigh the bears.
From derivatives to the NFT sector
The Investor Insights report covers various other topics such as security tokens, DeFi, blockchain games, cryptocurrency mining, blockchain-related stocks, regulation, and venture capital investments. Subject matter experts keep up to date with all the latest news and trends to cut weeds and provide essential insights into the blockchain industry.
Each section of the report covers important elements that have an impact on the subject. Subject matter experts cover the most important events that will have a significant impact, and the information is presented in a digestible format that serious cryptocurrency market participants can use to get information, highlights and a forecast of what may be on the horizon. . The newsletter is now available for subscription and offers comprehensive charts and detailed analysis.