Bitcoin’s Downward Channel and Loss of Momentum Could Turn $60K into Resistance – News Couple
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Bitcoin’s Downward Channel and Loss of Momentum Could Turn $60K into Resistance


Bitcoin (BTC) appears to lack the strength to retest the all-time high of $67,000 that it reached on October 20th, and this is causing investors to question whether the bullish moment has fizzled out. Even with the price facing these hurdles, it is still too early to call the $58,000 support level to test the start of the descending channel.

Bitcoin price in US dollars at Coinbase. Source: TradingView

Among the factors limiting the rise is the regulatory uncertainty in the United States. Ann Termin, partner in government enforcement and investigations practice at Bracewell LLP and former chief allegation attorney for the Commodity Futures Trading Commission (CFTC), said there were “no easy answers” for the agency to provide clear rules.

On the other hand, increased adoption has been putting pressure on traditional banks to look for cryptocurrency product offerings. For example, one of the major Russian private banks Tinkoff, owner of large online brokerage services, is looking for investment services related to cryptocurrency despite the fact that the Bank of Russia has blocked such launches.

This week, Coinbase took the lead as the most downloaded United Stated Apple Store app, which is amazing. Coinbase has beaten tech giants like TikTok, YouTube, and Instagram and that’s no small feat. Coinbase was first listed on the App Store in 2014 and was the most popular download in the US in 2017 and May 2021.

Professional traders falter but are up again

To determine how up or down professional traders are, one should monitor the futures premium – also known as the “underlying price”.

The index measures the difference between long-term futures contracts and the current price on the spot market exchanges. An annual premium of 5% to 15% is expected in healthy markets, known as contango.

This price gap is caused by participants asking for more funds to block the settlement for a longer period, and a red alert appears when this indicator fades or becomes negative, known as a ‘rollback’.

The base price of the 3-month Bitcoin futures contract. Source: Laevitas.ch

Notice how the sharp drop caused by the $58,000 test of resistance on October 27th brought the annual futures premium to its lowest level in three weeks. With that said, the index has recovered well to the current 17%, indicating a moderate bullish trend.

To confirm whether this movement is specific to that instrument, one must also analyze the options markets.

A delta deviation of 25% compares similar buy (buy) and put (sell) options and will become positive when the ‘fear’ spreads. This position reflects protective call options that cost more than similar risk call options.

The opposite movement proves when the market makers are bullish, causing the 25% delta to turn negative. Readings between negative 8% and positive 8% are considered neutral.

Deribit Bitcoin Options 25% delta skew. Source: laevitas.ch

The delta deviation of 25% has been ranging in the neutral zone since September 30th. The last low on October 25 was minus 6%, which is not enough to be considered a moderate uptrend. However, even the 12.5% ​​retracement of Bitcoin from $66,600 on October 21 to $58,200 on October 28 was not enough to frighten professional traders.

Although no bearish signs are emerging from the bitcoin derivatives market, bulls should be concerned about a possible downside channel that begins on October 19. If this move gets further confirmation, traders should expect $60K to become resistance by November 12th.

There are currently no signs of pressure from professional traders, so the correction after the 63% rally in three weeks that led to an all-time high of $67,000 on October 20 should not be a problem.

The opinions and opinions expressed here are solely those of author and do not necessarily reflect the opinions of Cointelegraph. Every investment and trading move involves risks. You should do your research when making a decision.