August 25, 2021

The $50.000 BTC? Professional Traders Are Skeptical about This Option

The coin with a stellar reputation has finally reached the $50,000 mark this week. Nevertheless, according to recent data, pro traders remain skeptical about this. What is the reason - let’s figure it out right now.

What’s Behind the BTC Growth 

The decentralized super-organism is again sufficiently high. Whales accumulation, the adoption of institutional investors, and positive responses from regulators about the possible approval of the EFT investment fund played their part. Despite that happy event, it seems that the price dynamics haven’t impressed the top traders.

Will Clemente, the on-chain analyst, focused attention on the accumulation of addresses having from 1000 to 10000 BTC. He texted on Twitter: "Today the price fell, while whale holdings increased by 13,000 BTC. Funny how that works”.

JPMorgan Chase and Wells Fargo are partnering with the NYDIG management company to provide clients with access to digital gold through launched funds.

Expectations for positive change got higher when Gary Gensler, Chair at SECGov, spoke about the need to address the question with bitcoin exchange-traded funds.

Last but certainly least, the BTC hashrate has increased by 5% in the last seven days and reached 125 EH/s. Although the indicator was 30% lower than the peak in the spring before the Chinese ban, the system showed networking sustainability.

Futures Premium

This is one of the clearest examples of pro traders' optimism. It determines the gap between the quarterly contracts and the existing spot price. It is assumed that the “prize” will be from 6% to 14% in thriving markets, which is in conformity with the lending rate of stablecoins. Although during a bearish trend (learn more about the crypto market trends here), there is a backwardation, as the indicator goes out or i becomes negative.

Lately, the September contract has had a premium of 0.7%, which corresponded to a 7% annual rate. It is certainly far from a negative meaning, however, the plain fact remains that there is a lack of confidence (the price of digital cash increased by almost 30% during the same period).

Options Markets Prove Uncertainty

To remove non-market factors inherent in a futures instrument, we have to check the options markets. When liquidity providers and experienced traders are bullish, they ask for a higher premium on "call" options. This tendency results in  a -25% delta skew.

A skew indicator, which varies between -7% and + 7%, is, as a rule of thumb, seen as neutral. At the same time, the indicator moves above these figures when the downside protection is more expensive.

According to Laevitas, the 25% delta skew didn’t reveal higher costs for protection, which would have led to the index moving below -7%.

Final Words

Both futures instruments, which are mainly used by users who hold a large number of coins and arbitrage platforms, don’t feel the way some crypto fans and retail traders do when the BTC price had exceeded the “significant” level of $50,000. There are now strong indications that successful traders still question buying at the moment. Only time will tell what will happen next.

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