Since the low state at the time of 8.180 $ seven days ago, Bitcoin has experienced a strong recovery, and on Sunday up to 9.900 $ reached. An impressive rally, which has many convinced that the crypto-currency to rise again later.
Data of the Bitcoin derivatives markets indicate, however, that the crypto-currency could be subject to a 20% upswing in a short-term reversal.
The Bitcoin derivatives markets are signaling caution
Since the derivatives exchanges of the Bitcoin traders are increasingly adopted, given the data from these markets, better insights in Bitcoins development.
A prominent engineer recently shared the diagram below and it is noted that the refinancing rate of the Bitcoin Futures tends to OKEx “suddenly very high ()”.
Data for the rate of Funding of OKEx from analysts Byzantine General.
Extreme Finance rates indicate that one side of the market is überverschuldet. In this case, with the high rate of Funding, there are more aggressive Bitcoin buyer than the seller.
While the logic suggests that Bitcoin should rise higher, rates of extreme Financing is often the case with a reversal of the trend and not in the middle of a Trend.
In addition to the futures market, pointing to a potential reversal, show data from the options market that investors anticipate a downward movement.
The Insights Team of the crypto-currency derivatives exchange Deribit recently wrote that “the real money is flow, the purchase of Puts”. That is, apart from the bullish news, there are big investors that put money into derivatives contracts, and bet, that Bitcoin goes in the coming months, to below:
“There are a variety of users, and theses for the purchase of Puts, not all of them are bearish; the protection can be careful bullish. But there seems to be some aggressive buyers who are still concerned and the repayment of the predictions,“ the stock market.
Not the only sign for a trend reversal
Not only data of the derivatives market signal turning a potential trend.
According to the order book data of the BTC/USD market on Bitfinex, which shares a popular crypto-Trader, there is a massive Block of orders that want to sell Bitcoin to $ 10,000, and is likely to be difficult to break through.
The Bitfinex order book suggests that there are sell orders of about 4.200 Bitcoin is worth $9.900 to $10.600, of which the majority of the group $10,000 to $10.200.
This means that solely on a stock exchange, a selling pressure in value of over 40 million dollars is created, if the crypto-currency is trying to recover about $ 10,000 and beyond.
Screenshot of the order book (BTC/USD) of Majin (@Majinsayan on Twitter), a crypto-Trader.
Over 40 million dollars in sales contracts may not seem like much in a market, in the daily crypto-currencies in the value of tens of billions of dollars change hands. But the last Time Bitcoin saw a sell wall is similar to the current, crashed the Coin.
This Trend is also confirmed by four of the six companies own figures for the Blockchain-news service into theblock, which BTC is currently “mostly bearish” and the number of large transactions slows down. In addition, the Trader will slow unprofitable, and short-term growth of Bitcoin slows down.