As a seasoned crypto investor who has navigated the wild rollercoaster that is the Bitcoin market for the past five years, I must admit that today’s price rally to $66,300 has me both excited and cautious. The bullish momentum is undeniable, but history has taught me that the road to higher prices is fraught with resistance levels.
To start off this week, Bitcoin’s price surged to reach $66,300, but can the bulls keep up this momentum going? Over the past seven months, many of Bitcoin’s price increases have been halted by resistance levels above, with the latest being around $65,000 to $66,000 – a level where it hasn’t managed to close a day yet.
Today’s surge in Bitcoin’s value has momentarily pushed it beyond the trendline of its downward channel, but whether or not it will end the day significantly above this resistance line remains uncertain.
As a researcher, I’ve noticed a pattern similar to past Bitcoin rallies. The recent price surge towards $66,300 was significantly influenced by the futures markets. This influence is evident in the sharp increase in the funding rate and open interest. Essentially, this means that as BTC climbed, short traders were compelled to buy due to market dynamics, contributing to the overall rise in price.
During our conversation about the day’s price fluctuations in cryptocurrencies, I, as an analyst, pointed out to JJ, who is the head of crypto options and derivatives at HighStrike, that…
“BTC surged higher as a breakout back above the 200-day brought in renewed interest from call buyers in the options market. The most popular among these strikes have been 75-100k calls for Q4 of this year as mentioned by Kelly Greer of Galaxy Digital.”
In simpler terms, enthusiasts are purchasing a significant number of call options, specifically between 75,000 and 100,000, with the majority set for December. Some options for October and November are also being bought. As of now, approximately 70,000 of these call options have open interest on Deribit. The increase in buying activity became noticeable towards the end of last week as the average true range (ATR) seller began to slow down. This shift is reflected in the implied volatility and skew.
— Kelly Greer (@kellyjgreer) October 14, 2024
JJ clarified that he believes multiple factors are driving the increase in Bitcoin‘s price. The most prominent ones appear to be the escalating odds of Trump on Polymarket, which haven’t been this high since July when Bitcoin reached $70,000, and MicroStrategy’s recent surge to new year-to-date highs.
In response to the question about whether the price surge beyond $66,000 signified a clear shift in trend, JJ cautioned that significant resistance persists above the September highs, as the Coinbase order book shows numerous sell orders piled up at that level.
“Though the stars are aligning for a Q4 breakout to new all-time highs, participants should still expect a range bound market with liquidity sweeps to the downside so long as these ask walls remain.”
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2024-10-14 22:55