Bitcoin derivatives data reflects traders’ mixed feelings below $17,000

Bitcoin (BTC) mislaid 25.4% successful 48 hours, bottoming astatine $15,590 connected Nov. 9 arsenic investors rushed to exit positions aft the 2nd largest cryptocurrency exchange, FTX, halted withdrawals. More importantly, the sub $17,000 levels were past seen astir 2 years prior, and the fearfulness of contagion became evident.

The determination liquidated $285 cardinal worthy of leverage agelong (bull) positions, starring immoderate traders to foretell a imaginable downside of $13,800.

— JD (@jaydee_757) November 14, 2022

As described by autarkic marketplace expert jaydee_757, the bearish inclination continues to exert its pressure, with $17,200 arsenic a absorption level. Still, specified an investigation provides nary warrant that the eventual $13,800 bottommost volition beryllium hit.

Curiously, the terms enactment coincided with improving conditions for planetary equity markets connected Oct. 4, arsenic the S&P 500 scale gained 6.4% betwixt Nov. 10 and Nov. 11 and the tech-heavy Nasdaq Composite rallied 9.5%. Hence, astatine slightest from a method perspective, Bitcoin wholly decoupled from accepted finance.

Additional uncertainty connected Bitcoin has been brought connected by Grayscale Bitcoin Trust (GBTC) trading connected over-the-counter banal markets aft the $11.4 cardinal money discount to its assets surpassed 40%.

— Vance Spencer (@pythianism) November 11, 2022

As noted by Vance Spencer, the implied BTC terms according to the funds’ trading is beneath $9,000, and unit should proceed if immoderate holders usage their shares arsenic collateral for loans.

Still, the antagonistic sentiment that caused Bitcoin to interruption beneath $20,000 does not mean nonrecreational investors are bearish astatine the existent terms levels.

Margin traders did not adjacent their longs

Monitoring borderline and options markets supply fantabulous penetration into however nonrecreational traders are positioned, allowing investors to get cryptocurrency to leverage their trading position.

For instance, 1 tin summation vulnerability by borrowing stablecoins to bargain an further Bitcoin position. On the different hand, Bitcoin borrowers tin lone abbreviated the cryptocurrency arsenic they stake connected its terms declining. Unlike futures contracts, the equilibrium betwixt borderline longs and shorts isn’t ever matched.

OKX USDT/BTC borderline lending ratio. Source: OKX

The supra illustration shows that OKX traders’ borderline lending ratio has accrued from Nov. 8 to Nov. 10, signaling traders did not adjacent their leverage longs contempt the 25.4% terms correction.

Furthermore, the metric continues to favour stablecoin borrowing by a wide margin, indicating traders person been holding bullish positions.

Option markets flipped bearish

Traders should scan options markets to recognize whether Bitcoin tin reclaim the $18,500 support. The 25% delta skew is simply a telling motion whenever arbitrage desks and marketplace makers are overcharging for upside oregon downside protection.

The indicator compares akin telephone (buy) and enactment (sell) options and volition crook affirmative erstwhile fearfulness is prevalent due to the fact that the protective enactment options premium is higher than hazard telephone options.

The skew indicator volition determination supra 10% if traders fearfulness a Bitcoin terms crash. On the different hand, generalized excitement reflects a antagonistic 10% skew.

Bitcoin 60-day options 25% delta skew: Source: Laevitas

As displayed above, the 25% delta skew had been beneath 10% since Oct. 26, but it rapidly moved supra that threshold connected Nov. 8, suggesting options traders were pricing a higher hazard of unexpected terms dumps.

Whenever this metric stands supra 10%, it signals that traders are fearful and reflects a deficiency of involvement successful offering downside protection.

Related: Crypto.com’s CRO is successful trouble, but a 50% terms rebound is successful play

FUD dismissal does not hap overnight

Despite the bearish Bitcoin options indicator, the OKX borderline lending complaint showed whales and marketplace makers maintaining bullish bets. The contagion fearfulness mightiness explicate the mixed feeling arsenic investors conflict to construe caller movements by the Crypto.com exchange, including an "accidental" transportation of 320,000 Ether (ETH) to Gate.io.

Run connected Crypto com starts aft FTX collapse. Investors began pulling funds from Singapore-based crypto speech successful a motion that the melodramatic illness of FTX is sparking contagion among exchanges. Cronos, token underpinning Crypto com business, has plunged. https://t.co/evk4J1vnnL pic.twitter.com/wMJmvch2D0

— Holger Zschaepitz (@Schuldensuehner) November 14, 2022

Analyst Holger Zschaepitz's station describes investors' existent sentiment arsenic unwilling to instrumentality risks connected centralized exchanges offering akin products and services from the now-bankrupt FTX.

Consequently, derivatives are reflecting debased assurance successful regaining the $18,500 enactment until much information shows that the cryptocurrency ecosystem's liquidity has been restored.

The views and opinions expressed present are solely those of the writer and bash not needfully bespeak the views of Cointelegraph.com. Every concern and trading determination involves risk, you should behaviour your ain probe erstwhile making a decision.