Options Market Analysis
Bitcoin price is now sub $49,000, about 27% below the ATH ($69k). Options traders set different hedging strategies during the previous weeks to protect against the market downside. Next Friday, December 17th, about $630 million worth of bitcoin options contracts will expire in Deribit. The max pain scenario for this expiry is if the price is at $50K. Calls at 60k strike price have the highest open interest with 1005 contracts. Options traders have sold lots of calls for this strike. They seem to look at the 60k strike price as a resistance for now.
Short-term realized volatility is still higher than implied volatility. It seems that options traders are unsure of V-shape recovery yet.
Top instrument OI change during the last 48 hours shows that demand for puts due to protection has increased for December.
Long-term Analysis – Weekly
The combination of the weekly chart and RSI indicator does not show a positive and promising sign for the mid-term. This RSI index is below 50, indicating bears’ greater power in the market. According to historical data, whenever this index falls below 50, we have had a downward trend or, at best, a ranging phase in market price action. The hope is for this index to recover and get out of the area.
The situation is not good on the daily chart either. The long-term uptrend in the market, which was formed since the COVID crash, has been lost. The OBV indicator shows similar conditions to the Apr-May crash. The uncertainty across the financial markets, because of the announcement of the inflation rate in the US and Europe, might introduce some volatility in the coming weeks.
The short-term holder’s SOPR (Spend Output Profit Ratio, which estimates sell price ratio to last time a coin was moved or buy price), showing these investors are selling at a loss. This is a sign of fear for top buyers who tend to be sensitive about short-term volatilities.