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Data Shows “Smart Money” is Looking to Buy Bitcoin at $8,800

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  • It has been a rough past couple of days for Bitcoin and the rest of the crypto market, with bears forcing BTC to dive as low as $10,000
  • The support found just below this price region was significant, as BTC quickly bounced and ran back towards the upper-$10,000 region
  • Bulls and bears have since reached an impasse, with the cryptocurrency consolidating as it attempts to garner some clearer directionality in the near-term
  • One analyst is pointing to data that shows whales are looking to add to their BTC positions within the $8,000 region
  • This means that a dip to here may be imminent in the coming weeks and months

Bitcoin and the aggregated crypto market have been flashing some mixed signs in recent weeks.

Despite seeing intense strength throughout the past month or so, BTC erased most of its recent gains when sellers forced it down to lows of $9,990 before it was able to rebound back into the mid-$10,000 region.

This selling pressure came about rather unexpectedly and shows that the $12,000 region remains a massive macro resistance level for the crypto.

Where it trends next may somewhat depend on whether or not bulls can reclaim $11,000 – as this level was previously strong support for the benchmark crypto.

Data suggests that whales are waiting for it to see significantly lower lows before it ascends higher.

Bitcoin Shows Signs of Weakness Despite Present Stability 

At the time of writing, Bitcoin is trading up just under 3% at its current price of $10,500. This is around the price at which it has been trading throughout the past 24-hours.

Following the intense selloff seen yesterday morning, BTC was able to find some stability around its current price region, and sellers have yet to retest its crucial $10,000 support level.

If buyers are unable to push it back above $11,000, however, there’s a high likelihood that lower lows are imminent.

“Smart Money” is Looking to Buy BTC at $8,800 

One indicator that lower lows could be imminent for Bitcoin is the presence of heavy bids from whales in the upper-$8,000 region.

This indicates that they anticipate the crypto to dip towards these lows.

“Nice to see you again Bitfinex Whale. Smart money has their bids sitting at $8800. I expect the bottom will likely be around there,” one analyst explained while pointing to the below chart, highlighting the bids in the region.

Image Courtesy of Cole Garner.

The upcoming weekend will likely prove to be a pivotal time for Bitcoin.

Featured image from Unsplash.
Charts and pricing data from TradingView.





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Bitcoin derivatives data shows pro traders ignored today’s $41K pump

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Sometimes all Bitcoin (BTC) needs to pump 10% is a positive remark from someone like Elon Musk.

The Tesla CEO has been pointed to as the culprit for the recent downturn after the company’s May 12 announcement explaining that it would no longer accept Bitcoin payments due to environmental concerns. Musk followed up by saying that he was looking into other cryptocurrencies that required 99% less energy consumption. 

However, on June 13, the situation reversed as Musk reassured the public that Tesla did not sell any additional Bitcoin. The post also said that the electric-car producer would resume taking BTC payments as soon as its Bitcoin mining relied on a minimum of 50% clean energy.

In bear markets, top traders act with caution

While retail investors and algorithmic trading bots jump into action as soon as bullish or bearish signals and news flash, top traders tend to act more with more caution. Those who have been around the crypto markets long enough know that positive news might end up being ignored or severely downplayed in bear markets.

On the other hand, even potentially negative news seems to have little to no impact during bull runs. For example, on Sept. 26, 2020, Kucoin was hacked for $150 million. The following week, on Oct. 1, the United States Commodity Futures Trading Commission charged BitMEX for operating an unregistered trading platform and violating Anti-Money Laundering regulations.

Two weeks later, police reportedly questioned the founder of OKEx, forcing the exchange to suspend crypto withdrawals. Had this series of negative news happened while Bitcoin was flat or in a bearish phase, the price would have undoubtedly have stalled during a bear market.

Bitcoin price at Coinbase in USD, Sept. 2020. Source: TradingView

As shown above, Bitcoin barely had any negative impact in late September and October 2020. In fact, by the end of November 2020, Bitcoin was up 74% in two months. This is the main reason why top traders tend to ignore positive news during bear markets and vice-versa.

The 3-month futures premium is neutral

A futures contract seller will usually demand a price premium to regular spot exchanges. This situation is not exclusive to crypto markets and happens in every derivatives market because in addition to the exchange liquidity risk, the seller is postponing settlement and this results in a higher price.

The 3-month futures premium (basis rate) usually trades at a 5% to 15% annualized premium in healthy markets. When futures are trading below the regular spot exchange price, it signals a short-term bearish sentiment.

Huobi 3-month Bitcoin futures basis. Source: Skew

As shown above, the future basis has been below 11% since May 20 and flirting with bearish territory on multiple occasions as it tested 5%. The current level indicates a neutral position from top traders.

The options skew is no longer signaling fear

The 25% delta skew compares similar call (buy) and put (sell) options side-by-side. It will turn positive when the protective put options premium is higher than similar risk call options.

The opposite holds when market makers are bullish and this causes the 25% delta skew indicator to enter the negative range.

Deribit Bitcoin options 25% delta skew. Source: laevitas.ch

The above chart confirms that top traders, including arbitrage desks and market markers, are currently uncomfortable with Bitcoin price as the neutral-to-bearish put options premium is higher. However, the current 7% positive skew is far from the 20% exaggerated fear seen in late May.

Derivatives markets show no evidence of top traders getting excited about the recent $40,000 hike. On the bright side, there is room for leverage buyers to mount positions. Stronger upswings usually occur when investors are least expecting, and the current scenario seems to be a perfect example.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.