Will BTC rebound? Data shows traders are betting on market volatility in the fourth quarter.
So far, BTC has experienced significant Fluctuation on the previous trading day, suggesting fragile investor sentiment. Earlier today, the asset surged to $57,300. However, after reaching this level, it seems to have lost momentum, with the current trading price at $55,966, a decrease of 1.6%.
The surge in volatility indicates that the market has become more fearful as traders follow several key technical levels. However, the latest data shows that as they seek more defensive strategies, traders' patterns have changed to long.
According to analysts from ETC Group's report, the outstanding contracts of BTCOptions that have not been closed have increased significantly, indicating that investors tend to adopt a downward protection strategy. The surge in implied volatility of short-term options indicates that short-term price movements are more active.
The BTCOptions trading market allows us to take a peek at the current market sentiment. The latest data shows that the bearish/bullish ratio (an indicator comparing the bearish Options with bullish Options volume) is higher than 1, indicating that the market is still bearish according to traders' actions.
This ratio indicates an increase in the volume of bets or hedging on a further price drop. We see this trend in the market, indicating that a significant portion of the market is preparing for the possibility of further BTC decline.
ETC analysts agree with this view and point out the special term structure of Volatility: the implied Volatility of short-term Options is higher than that of long-term Options - a traditional characteristic of market over-pessimism.
Analysts specifically point out that the soaring bullish/volume ratio and the 25 delta Options skew for downside protection indicate a significant increase in demand for downside protection. During the recent decline, BTC Options implied Volatility also slightly rose. The implied Volatility for 1-month ATM BTC Options is currently around 50.5% per annum. The term structure of Volatility has also reversed, with implied Volatility for short-term Options significantly higher than that for long-term Options. This is often a sign of excessive bearish sentiment in the Options market.
These dynamics have caused strong reactions in the market, and many celebrities have commented on the potential development path of Bitcoin.
Veteran trader Peter Brandt suggests that he expects BTC to form a double top structure, which is a bearish signal that could lead to a price drop of up to $44,000. However, Brandt also acknowledges that this structure may not meet all the requirements of the technical pattern and allows for different price outcomes.
Timothy Peterson's view is more positive. He said that since the price of BTC may exceed $50,000 by the end of July, it is 'very likely' to maintain or even pump in October. According to Peterson, there is a 60% chance of BTC trading in the coming months and a 25% chance of reaching a new all-time high in the next three months.
(Data Source: Samuel Edyme)
