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Cryptocurrency markets fell on Tuesday US stock prices With U.S. yields and a rising U.S. dollar, Hawkish comments by U.S. Federal Reserve Chairman Jerome Powell First day of his semi-annual testimony before the U.S. Congress on Tuesday.
Powell has warned that the Fed could raise interest rates at a higher pace than previously suggested. Analysts interpreted Powell’s remarks as opening the door to his possible 50bp rate hike at this month’s policy meeting.
After falling below that level since mid-February early in the session, Bitcoin rose just above $22,000 before dropping about 1.5% at the end.Technologists say Tuesday’s drop means Bitcoin has fallen below the uptrend it has been in since mid-January, and could retest February’s lows in the $23,000s and possibly the $18s range. pointed out that it means opening the door toth Lows in the $20,300’s range in January.
Indeed, the 14-day Relative Strength Index (RSI) suggests there is plenty of room for bitcoin to fall further before reaching an oversold point. A score below 30 is seen as an indication that market conditions have become too bearish.
Some bears believe Bitcoin’s 200-day moving average and realized price (the average price each bitcoin last moved on the blockchain) could be retested in the $19,700-$800 region. thinking about. Crypto futures traders have indeed turned bearish, with futures margin funding rates turning negative in recent days to levels not seen since early January.
As Powell warned of the possibility, whether U.S. interest rates will rise higher and at a faster pace than previously suggested will depend on how hot U.S. economic data are going to be. Crypto traders have been watching US jobs data nervously this week and hope the data does not reveal that the labor market is too strong. It is seen as a challenge for the Fed trying to keep inflation in check.
This could trigger further declines in cryptocurrencies as traders increase their bets on a 50bps rate hike from the Fed later this month if employment data comes out on the strong side. Sentiment may deteriorate.
Options Market Still Optimistic on Volatility Risk
Despite concerns that a more hawkish repricing to the US Federal Reserve (Fed) tightening forecast could trigger renewed crypto market volatility, the Bitcoin options market remains buoyed by price risks. It continues to show that it is still limited. For example, Deribit’s Bitcoin Volatility Index (DVOL) remained unchanged at 51 on Tuesday, not much above its January record low of 42, according to data presented by The Block. Deribit is the leading exchange for cryptocurrency derivatives.
Meanwhile, the delta skew of 25% for Bitcoin options expiring at 7, 30, 60, 90, and 180 days has also remained fairly flat within the recent range, and is still fairly close to zero in most cases. , indicating a fairly neutral market. positioning bias. In all fairness, the delta skew of 25% for short term expirations like 7 and 30 days is about -1.5 which is slightly negative, while 180 days is about 2.4 which is more moderate to long term than short term. Bitcoin price outlook.
Delta option skew of 25% is representative of the extent to which the trading desk is over- or under-billed for upside or downside protection via the put and call options it sells to investors. widely monitored as a good indicator. A put option gives the investor the right, but not the obligation, to sell the asset at a specified price, while a call option gives the investor the right, but not the obligation, to buy the asset at a specified price.
A delta option skew of 25% above 0 suggests that the desk is charging more for puts over comparable call options. This means that the demand for calls is stronger than for puts. This can be interpreted as a bullish sign as investors are keen to secure protection (or bets) against rising prices.
The options market is sending the message that prices are unlikely to fall significantly in the near term. This suggests that Bitcoin will find strong dip-buying interest if it retests key support areas such as around $21,400, the $20,300s, or the $19,700-$800s area. There is a possibility