Originally published on: June 20, 2022
Bitcoin has had a turbulent month, with prices dropping to below $18,000 for the first time since December 2020. Despite hopes of support at $20,000, professional traders remain skeptical, casting doubt on the cryptocurrency’s future. This comes at a time when global markets are also facing challenges, with major companies like Netflix, PayPal, and Caesars Entertainment experiencing significant losses.
Recent actions by the U.S. Federal Reserve to raise interest rates have added to the uncertainty, with fears of a recession looming. However, some analysts suggest that the growing market share of stablecoins in the crypto industry could signal a potential upswing for cryptocurrencies.
Derivatives data is key in understanding investor sentiment, with futures indicating a possible downturn. While retail traders tend to shy away from quarterly futures, professional traders use them to hedge against market fluctuations. When futures prices dip below spot market levels, a situation known as backwardation occurs, signaling a bearish trend.
Additional analysis from the options markets can provide further insights into market dynamics. The delta skew indicator, in particular, can reveal whether traders are pricing in upside or downside risks. A high skew, as seen recently, can indicate a bearish market sentiment, while a lower skew may signal bullish expectations.
While there are signs that Bitcoin may have reached a bottom, concerns around external factors like the Terra ecosystem and the financial health of major players in the industry continue to pose risks. As investors navigate these uncertainties, staying informed and conducting thorough research is crucial to making sound investment decisions.
For more expert insights and in-depth analysis on market trends, subscribe to our newsletter and stay ahead of the curve. By understanding the nuances of the market, you can spot opportunities, manage risks, and refine your trading strategies for success.
