BTCUSD forms hanging man and shooting star patterns on daily plotting at $9,685 and $9,800 levels respectively. Ever since then these bearish patterns plummet prices below DMAs and now below $7,500 mark, while both leading as well as lagging indicators in bears favor.

In April, a policy advisor in Fintech working at the Federal Reserve Bank of San Francisco took a stab at establishing the value of a Bitcoin. In his opinion, bitcoin seems to be overpriced, informed investors are likely taking profits now and we may be about to enter a panic sell-off mode.

Joost van der Burgt began by analyzing the proposal that Bitcoin is a currency. However, because Bitcoin is not widely used for purchases at this, Bitcoin’s value cannot be determined by analyzing factors used to set exchange rates on currencies, including interest rates and currency output levels. “The only applicable monetary determinant is money supply,” writes Joost van der Burgt. “Bitcoin’s limited total supply arguably supported its high valuation.”

If you reckon that the trends of this pair are puzzling, as BTC futures are available at CME which are cash-settled, the below derivatives strategy is the best suitable under such circumstances, when you hold underlying outrights but stuck-up with catch22 situations in the prevailing bearish swings.

The short hedge strategy is advocated that could be utilized by bitcoin holders at the higher levels ($10000 above levels) and sitting with losses amid the lingering bearish sentiments, CME short futures contracts render services to lock in the price of underlying BTC prices to be settled sometime in the predetermined future. Hence, the short hedge is also known as output hedge.

The short hedge involves taking up a short futures positions while owning the underlying outrights to be delivered. Should the underlying BTC price tumbles, the gain in the value of the short futures position would be able to offset the drop in revenue from the sale of the underlying.

Our currency strength indices are also indicating the same, FxWirePro's hourly BTC spot index that indicates the minor trend sentiments, is flashing at -175 levels (which is bearish), while hourly USD spot index was at -31 (bearish) while articulating at 06:22 GMT. For more details on the index, please refer below weblink:

http://www.fxwirepro.com/currencyindex

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