Bitcoin’s options market has flipped bearish for the short term, as demand rises for ways to hedge against further spot market sales.
The highest cryptocurrency by market value fell to $ 17,640 earlier on Wednesday, the lowest since Nov. 29. Prices rebounded a bit later and bitcoin was last seen changing hands near $ 18,300, according to CoinDesk 20 data.
Prices have dropped $ 1,000 in the last 24 hours, taking vital technical levels and sparking fears of a deeper decline in the short term. That is evident from the growing demand for giving options highlighted by a positive turn on the week demand trend.
The meter that measures the value of short-dated mail versus calls has risen from -0.20% to 15% in the last 24 hours, according to a Skew data source. Essentially, short-dated posts now fetch demand (or prices) higher than calls. The one-month demand-side trend has also improved from -21% to -7%, again reflecting demand for hedgerows for bitches.
The majority of the activity is concentrated in $ 17,000 in donations, and $ 15,000 ends this month.
“More than 300 $ 17,000 contracts issued with a notional value of more than $ 5 million have been traded on Deribit since midnight UTC,” said Shaun Fernando, head of risk and product at Deribit, the largest crypto options exchange back open volume and interest.
According to Matthew Dibb, CEO of Stack Funds, put options at $ 15,000 and $ 16,000 strikes have also seen an increase in purchases over the past week. “Investors appear to be hedging before the year is out,” he said.
However, the three-month and six-month skirmishes remain strong in the negative territory, suggesting a bullish longer-term outlook.
Technical charts, too, indicate scope for an extension of the highest-priced handicap ever reached in bitcoin of $ 19,920.
According to Ray Youssef, CEO of peer-to-peer market Paxful, $ 18,500 was a key support level, and cutting it has opened the doors for further discounts to $ 17,300.
Bitcoin’s move below $ 18,500 has marked a downside of the triangle pattern as seen on the daily chart. The 14-day relative strength index is now about to cross into bearish territory below 50.
Downside may be limited to $ 16,000, bitcoin tested on November 27 before plunging to a record high of $ 19,920 on December 1. “We believe there is strong support that should hold around $ 16,000, and , if so, it should maintain its bullish improvement, ”said Dibb.
Bitcoin has seen several disadvantages of more than 20% during previous bull runs that did not break the upward trend. For the current price of $ 18,200, bitcoin is down only 9% from the recent high of $ 19,920.
According to market analyst Joseph Young, the current bull run is different from the one seen three years ago. While the cryptocurrency could see longer periods of consolidation and decent setbacks, “that makes bitcoin healthier in the longer term,” he tweeted.
That said, the market may be shaken if there is negative news about the financial health of business intelligence company MicroStrategy, which has adopted bitcoin as a reserve asset.
A Bitcoin price slide from the last 24 hours has taken place alongside a decision by Citi to lower the recommendation on MicroStrategy to “sell” from “neutral.” An analyst referred to CEO Michael Saylor’s “disproportionate focus” on bitcoin as a trend that could be of concern to the business intelligence firm.
Also read: Citi Analyst Gets Saylor Bitcoin Focus, Cut MicroStrategy to ‘Sell’
“The concerns are that MicroStrategy’s recent foray into digital asset space will raise questions from regulators about its buying spree and also, some shareholders may voice their dissatisfaction with the move,” Denis Vinokourov, head of research at London’s leading brokerage , Bequant, he told CoinDesk. “If true the company’s underlying position is far less rosy and the company’s financial health is in doubt, the bitcoin holding will be forced to sell.”