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These Bullish Factors Suggest Bitcoin is Poised to Post an Explosive Move Higher

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  • Bitcoin’s price has remained steady despite the crypto market being struck multiple blows by recent developments
  • Last week, the market faced a $150m KuCoin hack, which was closely followed by the CFTC charging the BitMEX co-founders
  • The weakness created by these events was compounded by turbulence within the stock market due to President Trump’s health
  • Despite all this, Bitcoin’s price has remained squarely within the trading range it has been caught within over the past few weeks
  • One analyst is noting that its strength in the face of this indicates that an explosive move higher is brewing

Bitcoin and the entire cryptocurrency market have been consolidating for the past few days, after seeing some slight selling pressure earlier in the week.

This selling pressure resulted from a variety of different factors, but it wasn’t enough to alter the crypto’s underlying market structure.

While speaking about where he expects the market to trend next, one analyst noted that Bitcoin could be gearing up to see an explosive move higher in the near-term.

This move could help provide a tailwind for the entire cryptocurrency market, potentially sending altcoins also surging higher in tandem.

Bitcoin Shows Signs of Strength Despite Bearish News Events 

At the time of writing, Bitcoin’s price is trading up just under 1% at its current price of $10,600, which is around the point at which it has been trading at throughout the past several days.

Earlier this week, news surrounding the CFTC’s charges against the three co-founders of popular margin trading platform BitMEX rocked the market and caused Bitcoin’s price to fall from $10,900 to $10,400.

The cryptocurrency has been stable ever since, and it appears that the initial selloff was simply a knee-jerk reaction to the news.

This came about concurrently with fears surrounding the recent $150m KuCoin hack, as well as uncertainty within the traditional markets.

Analyst: BTC Likely to See Strong Push Higher as Strength Mounts

One analyst explained that a combination of strength in the face of multiple bearish developments and on-chain metrics flipping bullish seems to indicate that a push higher could be imminent for Bitcoin in the near-term.

“Bitmex FUD & Trump [News] barely made a dent on the BTC price. That’s pretty telling on the strength. On-chain metrics are bullish as well. I see no reason to be bearish on BTC unless the stock market crashes. The risk reward here is pretty sweet for spot BTC hodling.”

If Bitcoin pushes higher in the near-term, it could further confirm this sentiment and lead to an influx of buying pressure.

Featured image from Unsplash.
Pricing data from TradingView.





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Bitcoin

High priced $32K Bitcoin options show some pro traders expect more upside

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A month ago, one would be hard pressed to find any investor who would have expected a $32,000 Bitcoin (BTC) price for January. At the time, a 140% upside was needed from the $13,300 price on Oct. 30 and this seemed quite far fetched. 

Therefore, the January $32,000 BTC call (buy) options traded at Deribit for a meager $67, or 0.005 BTC in late October.

BTC $32,000 Jan. 2021 call option, in BTC. Source: Deribit

Fast forward to now, and the same call option peaked at $705. That’s an almost 10x gain in less than four weeks. Keep in mind that despite the rally to $19,484, an additional 67% upside is still needed to reach $32,000.

BTC Jan. 2021 call option market. Source: Deribit

Albeit the recent BTC price increase, the implied options probability (delta) currently sits at 11%. That call option price has also increased due to the BTC volatility change as sellers will request a more substantial premium for taking the risk during uncertain markets.

Intense price swings, regardless of the direction, will push volatility higher and any unexpected newsflow usually drives the indicator upwards.

Bitcoin 3-month options implied volatility. Source: Skew

Take notice of how BTC volatility spiked from 57% on 30 Oct. to 78% this week. This event is notably bullish for call option buyers. Even if the BTC price had stayed the same, the option price would have climbed accordingly.

Don’t take options probabilities literally

Options pricing is also heavily dependent on how distant the expiry date is. This same $32,000 call might be deemed worthless two days ahead of maturity. Therefore, traders should not fixate too much on implied options probability (delta).

BTC Dec. 2020 call option market. Source: Deribit

By looking at call (buy) options for Dec. 25, an investor might infer that the 26% odds for $20,000 seems dim. After all, an 18% pump in a month seems unreasonable. Traders tend to have a short-term memory, but an 18% increase in 30 days happened in 9 out of the past 12 months.

Bitcoin price (USD) at Bitstamp. Source: TradingView

The last time an 18% or even larger monthly pump happened was not so long ago. On Aug. 23 Bitcoin closed at $11,645, which was a 22% increase from the previous month.

Traders and investors should consider buying call options with longer expiry dates. Those who were brave enough to bet on the 150% BTC price increase a month ago are extremely satisfied with the results.

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