Bitcoin continues to explore the lower regions of its trading range. According to crypto analyst Marcel Pechman, derivatives data shows that a drop to $25,000 is almost inevitable. A crypto strategist says that the Bitcoin bull market is still going on.
Crypto fears more than FOMC meeting!
As you follow on Kriptokoin.com, Bitcoin successfully maintained the $ 25,500 support on June 10. However, it has been trading in a narrow range of 3.4% for the past three days. During this time, investors’ attention shifted to the macroeconomic area due to the US Federal Reserve’s interest rate decision to be announced on June 14. Cryptocurrencies can operate independently of traditional financial markets. But the cost of capital affects nearly every investor. In May, the Fed raised the benchmark interest rate to 5-5.25%, the highest level since 2007.
All eyes will be on Fed Chairman Jerome Powell’s press conference 30 minutes after the rate announcement. That’s because markets are pricing in a 94% probability of a pause at the June meeting, according to the CME FedWatch tool. The upcoming Federal Open Market Committee meeting is not the only concern for the economy. The U.S. Treasury will issue more than $850 billion in new bonds between today and September. The issuance of additional government debt tends to result in higher returns and therefore higher borrowing costs for companies and families. GDP growth is likely to be severely compromised in the coming months, given the credit market, which was already constrained by the recent banking crisis.
Investors watch $25,000 test for Bitcoin
Meanwhile, miners have been selling Bitcoin since early June, according to on-chain analytics firm Glassnode. This potentially puts more pressure on the price. Potential triggers include reduced gains from cooling in Ordinals activity. In addition, the mining hash rate reached an all-time high, which also contributed to the cooling.
Investors are now questioning whether Bitcoin will test the $25,000 resistance, a level not seen since mid-March. This is why they closely monitor hedging costs using Bitcoin futures contract premiums and BTC options.
Bitcoin derivatives show modest recovery
Bitcoin quarterly futures are popular with whales and arbitrage tables. However, these fixed monthly contracts are usually traded at a slight premium over the spot markets. This indicates that sellers are asking for more money to delay settlement. As a result, BTC futures contracts in healthy markets should trade at a premium of 5% to 10% per year. This is a situation that is not unique to crypto markets and is known as kontango.
Bitcoin 2-month futures annualized premium / Source: LaevitasWith the futures contract premium rising to 3% from 1.7% on June 10, demand for leveraged BTC long positions has increased slightly. However, it is still far from the neutral 5% threshold.
Investors want to understand whether the recent correction has caused investors to be more optimistic. Therefore, they need to analyze the options markets as well. The 25 delta skew is an important sign of when arbitrage tables and market makers overcharge for upside or downside protection. In short, if investors expect a drop in Bitcoin price, the skewness measure will rise above 7%. Also, excitement stages tend to have a negative 7% skewness.
Bitcoin 30-day options 25% delta skew / Source: LaevitasThe 25 delta skew metric entered “fear” mode on June 10, when the Bitcoin price faced a 4.5% correction. Currently at 4%, the indicator displays a balanced pricing between protective put options and neutral-bullish call options.
Bitcoin bull market still continues!
Crypto strategist Jason Pizzino says that Bitcoin’s long-term trend continues to rise even though it briefly entered a bearish trend after surging above $30,000. In this direction, the analyst says that Bitcoin is still in the bull market. According to the analyst, the bull stance will not change as long as Bitcoin trades above $20,000. In this context, Pizzino makes the following statement:
Overall macro is on the upside… Bear market in the short term, yes: lower highs, lower lows. This is a short term situation. But in the longer term, there is a bull market. We’re still in it right now. That will change if we break $20,000.
Source: Jason Pizzino/YouTubePizzino also underlines that market participants seem to be raising their bottom targets for Bitcoin. According to the analyst, predictions for Bitcoin to drop to $10,000 are being suppressed by traders who expect BTC to bottom at $20,000. From this point of view, the analyst makes the following assessment:
Another thing to note is that when we dispersed (over the weekend), there weren’t many guesses like ‘This is going to $10,000 or $12,000’. There were those who said, but nowhere did those who put forward for $10,000 or $12,000, as with $20,000. Now people just hope we get back to $20,000. So you’re starting to see the bar go up. This is a very characteristic feature of climbing the wall of anxiety, and its lower goals are getting higher and higher.
The analyst goes on to say that the $24,000 level could offer support for Bitcoin if trader sentiment goes overboard. In this direction, the analyst said, “The bull market still continues. The macro pivot points have not changed. They’re not broken… So let’s be comfortable. We still have downside. If we experience extreme fear, extreme emotions, and extreme excitement, look at where these pivot points are. We are looking for a range around $24,000. So anything within this region really doesn’t matter,” he says.
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