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Bitcoin price hits $32K but derivatives metrics still show signs of weakness

July 21, 2021. Summarized by summa-bot.

Compression ratio: 30.2%. 1 min read.

Bitcoin price rallied 8.5% to recover the $32,000 level, but derivatives data shows pro traders still feel apprehensive.

There's no doubt that the last couple of months have been bearish for Bitcoin (BTC), but throughout this entire period, derivatives indicators have been relatively neutral.

After two months of struggling to sustain the $30,000 support and finally losing it on July 20, the futures premium and options skew turned bearish.

As previously mentioned, derivatives indicators flipping negative should hold more weight than assumptions on the bullish or bearish interpretation of on-chain data.

This indicator allows investors to understand how bullish or bearish professional traders are because it measures the difference between monthly futures contracts and the current spot market price.

At the moment, professional traders are likely leaning bearish after Bitcoin lost the critical $30,000 support, but further confirmation can be gained from looking at options markets.

Call options provide the buyer with upside price protection, and the put option is a right to sell Bitcoin at a fixed price in the future.

Currently, there's enough evidence of bearishness in the futures and options markets, and this hasn't been the case over the past two months.

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by summa-bot

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