Bitcoin price lost $30,000 and fell below it. However, data indicates that $30,000 and above is the path of least resistance. Despite the price slumping to $29,000, Bitcoin metrics show traders are betting on a quick recovery, according to various Crypto expert Marcel Pechman.
Bitcoin is down, but metrics are pointing up!
As you follow on Kriptokoin.com, on July 24, Bitcoin experienced a sudden collapse and fell to $ 29,000. This move resulted from major Bitcoin holders potentially liquidating their positions. Amid the crash and market uncertainty, Bitcoin’s three main trading metrics continue to reflect the bullish outlook. This shows that professional traders do not reduce their leverage through the use of margin and derivatives.
Analytical firm Glassnode reported an increase in whales entering stock markets. He also noted that with 41% of total BTC inflows, it reached its highest level in over three years. This strong sell-off from the whales has alarmed investors, especially in the absence of any significant negative events affecting Bitcoin in the past month. In particular, the ongoing lawsuits by the US Securities and Exchange Commission against leading exchanges Binance and Coinbase are of great concern. However, there was no significant progress in these cases. These cases will likely take years to reach a conclusion.
Is Bitcoin’s price drop related to the US dollar?
Despite the historical volatility, Bitcoin’s collapse became more pronounced after trading in a narrow 5.7% daily range for 33 consecutive days. The S&P 500 gained 0.4%, while crude oil rose 2.4%. In addition, the MSCI China stock index rose 2.2%. Considering all these, this move is even more remarkable.
However, gold, the world’s largest global reserve asset, fell 0.5% on July 24. This also needs to be taken into account. Also, the US Dollar Index (DXY) reversed the two-month depreciation trend against rival fiat currencies. Thus, it rose from 99.7 to 101.4 between July 18 and July 24.
US Dollar Index (DXY). Source: TradingViewIf investors believe the Federal Reserve will successfully manage the soft landing, it would make sense to reduce exposure to gold and Bitcoin while increasing positions in the equity market. The reduced probability of a recession will likely have a positive impact on corporate earnings.
Margin and derivatives markets show committed professional traders
Has the decline of Bitcoin’s price to $29,000 successfully disrupted the market structure? To understand this, it is necessary to analyze the margin and derivatives markets. Margin trading allows investors to strengthen their positions by borrowing stablecons and using the proceeds to buy more cryptocurrencies.
OKX stablecoin/BTC margin lending ratio. Source OKXMargin lending by OKX traders based on the stablecoin/BTC ratio rose from July 22 to July 24. This shows that professional traders are adding leveraged longs despite the recent price drop.
Traders need to validate this data with derivatives to be sure of its market-wide impact. In healthy markets, BTC futures contracts typically trade at a 5% to 10% annual premium, known as kontango, which is not crypto specific.
Bitcoin 2-month futures annualized premium. Source LaevitasNotice how the indicator maintains a healthy average annual premium of 5.7%, which is slightly lower than two days ago but still in the neutral range. These data confirm the resilience of the margin markets. However, it would be useful to look at options markets to better gauge market sentiment.
The 25 delta skew can reveal when arbitrage tables and market makers charge higher prices to hedge against upside or downside moves. In short, a skewness measure above 7% indicates that investors expect a drop in Bitcoin’s price, while periods of excitement usually yield a skewness of -7%.
Bitcoin 30-day options 25% delta skew. Source LaevitasA negative 25 delta skew indicates that bullish call options are traded at a premium compared to protective put options. This supports the thesis that professional traders are unaffected by the flash crash, without any evidence of pessimism among whales and market makers.
$30,000 or more for Bitcoin is the most logical way!
Regardless of the reasoning behind the price action on July 24, Bitcoin bears failed to dampen investor optimism. It also increased the likelihood of a recovery above $30,000 in the short term. In particular, the appreciation of the US dollar does not affect the predictable monetary policy of Bitcoin, its resistance to censorship and its autonomous structure as a means of payment.
From a brighter perspective, the possible approval of a spot Bitcoin exchange-traded fund stands on the horizon. There are also some positive triggers, such as regulatory clarity. Evidence for this comes from a US bill introduced on July 20 that aims to establish a clear process for determining the classification of digital assets as commodities or securities. If the bill becomes law, it would give the Commodity Futures Trading Commission jurisdiction over digital commodities.
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