Cryptocurrency Derivatives Series: Uphold BTC Long Hedges As Bitcoin On Verge Of 7th Consecutive Weeks Rallies Breakout Stiff Resistance

Bitcoin price has exhibits renewed strength by edging higher towards $8k levels. The pair BTCUSD,  has, so far, jumped 3.2% in this week and staged for 7th consecutive weeks’ rallies (refer 2nd chart) amid pandemic coronavirus crisis. 

Technically, the pair (at Coinbase) has shown constant upswings in the minor trend ever since the occurrence of hammer pattern at $5,037 level. Today, it has broken out stiff resistance zone of $7.7k level and headed for next resistance of $7,974 levels (i.e. 100-DMAs) (refer 1st chart). Any decisive breakout above this level can bring in vigorous upside risks.

While on a broader perspective, the pioneer crypto has risen above 100-EMAs and retraced 23.6% Fibonacci levels of the Dec’2018 lows and all-time highs in Dec’2017 (refer 2nd chart). Please be noted that from April'16, the BTC has spiked from $414 to the all-time highs of $19k, currently, trading decisively at $7.5k levels, which is still a mammoth 1,660% rallies. However, some puzzling questions keep sceptics of crypto-space apprehensive and drives us to smart hedging.

• After Q1 crash, are the prudent investors-class clustering into Bitcoin still perceiving it as safe-haven?
• Will coronavirus crisis stimulates the use-cases of cryptocurrencies and blockchain technology?
• Is pandemic covid-19 perceived as threat or as an opportunity for the crypto industry?
• Is bitcoin continue to carry digital-gold narrative? 
• Fundamental forces like block-halving event driving the price? Or Is this time of evolution for the global currency system?
• What are the roles of blockchain and crypto in the combat against COVID-19?

Based on our analytical efforts for the genuine driving forces of such bullish interests in the recent past, we are inclined for our long hedges contemplating genuine driving forces.

With the confluence of fundamental and technical factors, we’ve accurately positioned our hedging perspectives on BTC using long hedge that has already been advocated about a month ago when it was trading at $4k levels. Well, these positions have, thus far, been functioning appropriately as per the expectations set-in while recommending.

The underlying price is now equipping to embark further northwards. Hence, in addition to the existing positions, we wish to buy 1m (1%) ITM delta call options as we could now foresee further upside traction for the bitcoin price to retest $9,000-10,000 areas in the next quite a few weeks to come. ITM calls are recommended along with the existing long positions in CME BTC Futures of May’2020 deliveries on hedging grounds.