Cryptocurrency Derivatives Series: Bitcoin Slides Paving Way For Fresh Bulls – Uphold Long Hedges

Bitcoin tumbles below $9,500 levels or slides more than 6.3%, we perceive this as bears are paving the way for fresh long build-ups.

Technically, hammer pattern candle takes-off BTCUSD (at Coinbase) rallies above 100-DMAs with bullish crossovers, bullish engulfing signals intensified buying sentiments as minor trend breaks-out stiff resistance, bulls shrug-off double top pattern, 7, 21 & 100-DMA act as strong support (refer 1st chart).

Since mid-March, BTC has spiked from $3,858 to the recent highs of $10,079 which is 160% rallies.

While in recent times, the Bakkt and CME’s bitcoin derivatives products have sensed considerable growth with total open interest (OI), crypto-exchange Derbit has the lion’s share in OI of BTC options data, while Bakkt and CME prints fresh all-time highs (refer 3rd chart), futures worth about $61 and $66 million respectively in outstanding OI, showed a slight dip from recently observed.

As stated before in our recent post, a decisive volume data could not ensure the follow-up. Besides, bulls began playing their cards in a defensive modes.

The considerable mounting in crypto-derivatives volumes in May, the Chicago Mercantile Exchange (CME) registered the most significant surge of 59% since April.

If you see BTC options open interest by strike, it is understandable that the underlying BTC price is most likely to hit $11k levels (4th chart).

As we could foresee more upside risks in the days to come with the strong support of $7,950 levels (i.e. 100-DMAs), long hedges have already been advocated using CME BTC Futures when the underlying BTC was trading at $4,927 levels, and we wish to uphold the same positions with June months deliveries. It is unwise to keep speculating on the next upside target and accumulate fresh bitcoins. Instead, one can certainly uphold the above advocated long hedges for now (spot reference: 9,366 levels).