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26 November 2020

HODL your horses, Bitcoin options data says $18.5K is not a local top

HODL your horses, Bitcoin options data says $18.5K is not a local top

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This adjustment led some investors to question whether the current formation resembles the $13,850 top formed in July 2019.

Basis is also frequently referred to as the futures premium, and it measures the premium of longer-term futures contracts to the current spot (traditional markets) levels.

Fixed-month futures contracts usually trade at a slight premium, indicating that sellers request more money to withhold settlement longer.

To further differentiate the current price action from July 2019, two weeks ahead of the price peak the futures premium stood at 0%, a clear indication that investors were feeling bearish.

This means investors have kept positive expectations over the past couple of months, whereas in July 2019, the market faced an intense, quick, optimistic rush.

To better assess the current market sentiment, investors should also evaluate options market spreads.

Investors should not make decisions solely based on the interpretation of a single indicator that shows option traders are overly bullish right now.

There are substantial differences between July 2019 top and the current market according to futures and options markets.

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