Two Bitcoin Indicators Shine Bright in a Depressed Market
Bitcoin (BTC) had a tough August, dropping over 13% and falling to as low as $50,000 due to various reasons, like the unwinding of yen carry trades and worries about the U.S. economy. Despite the challenging market, participants can find hope in at least two indicators.
Long-Term Options Skew Remains Bullish
Even though the market experienced a steep decline, bitcoin’s 180-day call-put skew stays steady above 3, showing a bias for price strength over the next six months, according to data from Amberdata.
What Does This Mean?
- Call Option: Gives the holder the right to buy bitcoin at a set price in the future, hinting at a bullish sentiment.
- Put Option: Represents a bearish view.
- Options Skew: Measures investor sentiment by looking at the prices of calls and puts. A positive skew means there’s a stronger demand for calls, indicating a hopeful outlook.
Some market watchers believe that as the initial shock from global market volatility eases, bitcoin will regain its strength. Analysts from LondonCryptoClub commented, “The U.S. slowdown is evident, and the Federal Reserve will likely cut rates aggressively, which is very bullish for bitcoin. Additionally, with China boosting its economy and a weaker dollar, global liquidity will rise.”
“Expect a few volatile weeks, but keep the big picture in focus,” they added.
CVD Suggests Dip-Buying on U.S. Exchanges
Despite the rapid sell-off, there’s evidence of dip buying on U.S. platforms like Coinbase, Gemini, and Kraken, indicated by the Cumulative Volume Delta (CVD) tracked by Kaiko, a Paris-based firm.
Understanding CVD
- Cumulative Volume Delta (CVD): Shows the difference between the volume of trades at the ask price (buying) and at the bid price (selling) over time.
- Positive CVD: Implies more buying than selling.
- Negative CVD: Indicates more selling.
Since August 1st, the CVD on platforms like Coinbase, Gemini, and Kraken has stayed mostly positive, signaling buying pressure or bargain hunting during the price drops.
Kaiko noted, “While offshore exchanges like Binance and OKX saw strong selling, the CVD on most U.S. platforms remained positive, suggesting some traders were buying the dip.”
With these insights, it appears that despite the current market gloom, there are underlying positive indicators for bitcoin. Whether it’s the bullish long-term options market or the dip-buying activity on U.S. exchanges, these factors offer some rays of hope for crypto enthusiasts and investors.
