Futures

Bitcoin derivatives data points to traders' $50K BTC price target

Bitcoin bulls expectations of $50,000 and higher remain feasible according to BTC futures and options markets.

Bitcoin (BTC) price continues to trade below its 2023 high, a sign that investors may have underestimated the strength of the $44,000 resistance. Even as BTC price trades below $42,000, it doesn’t necessarily mean that reaching $50,000 and beyond is no longer possible. In fact, quite the opposite seems more likely to occur. Looking at Bitcoin derivatives metrics, it is clear that traders ignored the 6.9% drop and remained optimistic. However, is this optimism enough to justify further gains?

The $127 million liquidation of leveraged long Bitcoin futures on Dec. 11 may seem significant in absolute terms, but it represents less than 1% of the total open interest – the value of all outstanding contracts. Nevertheless, it’s undeniable that the liquidation engine triggered a 7% correction in less than 20 minutes.

On one hand, one could argue that derivatives markets played a crucial role in the recent negative price movement. However, this analysis overlooks the fact that after hitting a low of $40,200 on Dec. 11, Bitcoin’s price increased by 4.2% in the following six trading hours. In essence, the impact of forceful liquidation orders had dissipated long ago, disproving the notion of a crash solely driven by futures markets.

Bitcoin price continues to drop, but how are pro BTC traders positioned?

Data shows top traders futures’ Bitcoin long-to-short at the lowest level in 30 days, but what does this mean for BTC’s short-term price action.

Bitcoin (BTC) has experienced a remarkable 15.7% price surge in the first six days of December. This surge has been heavily influenced by the anticipation of an imminent approval of a spot exchange-traded fund (ETF) in the United States. Senior Bloomberg ETF analysts have expressed a 90% probability for approval by the U.S. Securities and Exchange Commission, which is expected before Jan. 10.

However, Bitcoin’s recent price surge may not be as straightforward as it seems. Analysts have failed to consider the multiple rejections at $37,500 and $38,500 during the second half of November. These rejections have left professional traders, including market makers, questioning the market’s strength, particularly from the perspective of derivatives metrics.

Bitcoin’s 7.6% rally to $37,965 on Nov. 15 resulted in disappointment as the movement fully retracted the following day. Similarly, between Nov. 20 and Nov. 21, Bitcoin’s price declined by 5.3% after the $37,500 resistance proved more formidable than anticipated.

CME Group to expand Bitcoin and Ether option expiries after record daily volume

The CME Group aims to offer market participants more accuracy and flexibility in managing the risk of short-term fluctuations in the prices of Bitcoin and Ether.

On April 17, derivatives marketplace Chicago Mercantile Exchange (CME) Group announced it would broaden its range of cryptocurrency options by adding new options to its standard and micro-sized Bitcoin (BTC) and Ether (ETH) contracts. Pending regulatory review, these new contracts will be available from May 22, and expiries will be available every day of the business week from Monday to Friday.

According to the announcement, CME Group’s expanded suite of cryptocurrency options will include new expiry dates for Bitcoin and Ether futures contracts. These options will now expire every day from Monday to Friday, providing traders with greater flexibility to manage short-term price risks. Furthermore, options on micro-sized Bitcoin and Ether futures contracts will add Tuesday and Thursday expiries to their existing Monday, Wednesday and Friday contracts. The newly added expiries will complement the existing monthly and quarterly expiries that are already available across all Bitcoin and Ether options on futures contracts.

The move, according to CME Group, is aimed at providing market participants with greater precision and versatility in managing short-term Bitcoin and Ether price risk. It also comes at a time of heightened market volatility in the digital asset sector.

CME Group’s Bitcoin and Ether futures and options complex has already achieved a record daily average notional of more than $3 billion through Q1 2023. This signifies an increase in client demand for liquid hedging tools. The complex achieved other trading highlights as well, including a record 11,500 contracts and open interest, with a record average of 24,094 contracts for Bitcoin futures and options in Q1 2023. In addition, CME Group’s Bitcoin and Ether futures and options have a surge in trading volumes, with a record 2,357 Bitcoin options contracts traded on March 22 and a record open interest (OI) of 14,700 contracts on March 31.

CME Group introduced its first BTC futures contract in December 2017, followed by an ETH futures contract in February 2021. To cater to the increasing demand for cryptocurrency investment options, the exchange expanded its offerings in 2022 to include micro BTC and ETH futures. Additionally, it launched euro-denominated BTC and ETH futures when the euro was trading at parity with the United Statesdollar, which is currently worth around $1 per euro at the time of writing.

As at the time of publication, the price of ETH is at $2,085 and the price of BTC is at $29,503, falling below its previous high of $30,000.

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Healthy Bitcoin rally: What does a margin lending ratio drop mean for BTC price?

Will the $30,000 BTC price hold? Bitcoin market structure remains bullish, with another 10% gain on the table as sellers refrain from shorting.

Bitcoin (BTC) price rallied over 10% between April 9 and April 14, marking the highest daily close in over 10 months. While some analysts may argue the move justifies a degree of decoupling from traditional markets, both the S&P 500 and gold are near their highest levels in over six months.

Bitcoin price breaks $30,000 despite macro headwinds

Bitcoin’s gains and rally above $30,000 also happened while the U.S. Dollar Index (DYX), which measures the currency against a basket of foreign exchanges, reached its lowest level in 12 months.

The indicator fell to 100.8 on April 14 from 104.7 one month prior as investors priced in higher odds of further liquidity injections by the United States Federal Reserve.

The latest Federal Reserve’s monetary policy meeting minutes, released on April 12, made explicit reference to the anticipation of a “mild recession” later in 2023 due to the banking crisis. Even if inflation is no longer a primary concern, the monetary authority has little room to raise interest rates further without escalating an economic crisis.

Even if inflation is no longer a primary concern, the monetary authority has little room to raise interest rates further without escalating an economic crisis.

Strong macroeconomic data explains investors’ bullishness

While the global economy may deteriorate in the coming months, recent macroeconomic data has been mostly positive. For example, the European Union’s statistics office reported that industrial production in the 20 member countries increased 1.5% month on month in February, whereas economists polled by Reuters expected a 1% increase.

Furthermore, China’s latest macroeconomic data showed an encouraging trend, with exports increasing 14.8% year on year in March, snapping a five-month decline and surprising economists who expected a 7% decline. As a result, China’s trade balance for March was $89.2 billion, far exceeding the $39.2 billion market consensus.

The contrast between the current economic momentum and the forthcoming recession triggered by higher financing costs and a reduced appetite for risk among lenders causes Bitcoin investors to question the sustainability of the $30,000 support.

Let’s look at Bitcoin derivatives metrics to better understand how professional traders are positioned in the current market environment.

BTC derivatives show no excessive leverage from longs

Margin markets provide insight into how professional traders are positioned because they allow investors to borrow cryptocurrency to leverage their positions.

OKX, for instance, provides a margin lending indicator based on the stablecoin/BTC ratio. Traders can increase exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only bet on the decline of a cryptocurrency’s price.

*OKX stablecoin/BTC margin lending ratio. Source: OKX*

The above chart shows that OKX traders’ margin lending ratio decreased between April 9 and April 11. That is extremely healthy as it shows no leverage has been used to support Bitcoin’s price gains, at least not using margin markets. Moreover, given the general bullishness of crypto traders, the current margin lending ratio of 15 is relatively neutral.

The long-to-short metric excludes externalities that might have solely impacted the margin markets. In addition, it gathers data from exchange clients’ positions on the spot, perpetual and quarterly futures contracts, thus offering better information on how professional traders are positioned.

There are occasional methodological discrepancies between different exchanges, so readers should monitor changes instead of absolute figures.

*Exchanges’ top traders Bitcoin long-to-short ratio. Source: Coinglass*

Interestingly, despite Bitcoin breaking $30,000 for the first time in 10 months, pro traders have kept their leverage long positions unchanged, according to the long-to-short indicator.

For instance, the ratio for Huobi traders stood firm near 0.98 from April 9 until April 14. Meanwhile, at crypto exchange Binance, the long-to-short slightly increased, favoring longs, moving from 1.12 on April 9 to the current 1.14. Lastly, at crypto exchange OKX, the long-to-short ratio slightly declined, from 1.00 on April 9 to the current 0.91.

Moreover, Bitcoin futures traders were not confident enough to add leveraged bullish positions. Thus, even if Bitcoin’s price retests $29,000 in terms of derivatives, bulls should be unconcerned because there has been little demand from short-sellers and no excessive leverage from buyers.

In other words, Bitcoin’s market structure is bullish, where BTC’s price can quickly rally another 10% to $33,000, given sellers are currently reluctant to short it.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

London Stock Exchange Group may provide clearing services for BTC derivatives in Q4

LCH SA will team up with the FCA-regulated GFO-X trading venue to create a centrally cleared, regulated trading environment.

The United Kingdom could see its first centrally cleared trading venue for digital asset derivatives due to a partnership between a London Stock Exchange Group (LSEG) business and trading startup Global Futures and Options (GFO-X). They intend to launch the service in the fourth quarter of this year.

According to an April 11 announcement, LCH SA, the Paris-based subsidiary of the LSEG clearinghouse, is set to provide clearing services for dollar-denominated, cash-settled Bitcoin (BTC) index futures and options contracts traded on the GFO-X venue. The plan still requires regulatory approval.

Digital Assets: LCH SA To Offer Clearing Services For Bitcoin F&O Contracts Traded On GFO-X https://t.co/n1bF2ZbZwp

— DailyAlts (@DailyAlts) April 13, 2023

GFO-X is regulated by the United Kingdom’s Financial Conduct Authority to operate a multilateral trading facility. GFO-X co-founder and CEO Arnab Sen described the company as “the UK’s first regulated and centrally cleared trading venue focused entirely on digital asset futures and options.”

LCH SA has created a new, segregated clearing service called LCH DigitalAssetClear. Frank Soussan, head of LCH DigitalAssetClear, said:

“Bitcoin index futures and options are a rapidly growing asset class, with increasing interest among institutional market participants looking for access within a regulated environment they are familiar with.”

Traditional financial institutions and other major corporations are increasingly moving into digital assets. In January, Samsung launched a Bitcoin exchange-traded fund on the Hong Kong Stock Exchange. The Tel Aviv Stock Exchange is seeking to expand its crypto trading. Meanwhile, a Boerse Stuttgart Digital subsidiary recently received approval from German regulators to offer crypto custody service. Nasdaq is expected to launch a crypto custody service in the first half of this year.

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Ethereum price metrics hint that ETH might not sell-off after the Shapella hard fork

ETH traders are exercising caution ahead of the April 12 Shapella hard fork, but the signal to watch is staking unlock requests.

Ether (ETH) price has increased by 58% year to date, but it has far underperformed the market leader Bitcoin (BTC). In fact, the ETH/BTC price ratio has dropped to 0.063, its lowest level in nine months.

Analysts believe that the majority of the movement can be attributed to the Ethereum network’s upcoming Shapella hard fork, which is scheduled for April 12 at 10:27 p.m. UTC.

*Ether / Bitcoin price ratio at Binance. Source: TradingView*

The Ethereum network upgrade will allow stakers to unlock their Ether rewards or stop staking entirely. By April 11, over 170,000 ETH withdrawals were requested, according to the analytics firm Glassnode. However, the total staked on the Beacon Chain exceeds 18.1 million ETH, which has traders fearful until more information on ETH’s potential selling pressure becomes available.

Is the price impact of the Shapella fork already priced in?

The staking unlock was widely known and expected, so traders could have anticipated the movement. Some analysts have gone so far as to call the hard fork a “buy the news” event.

Literally everyone: “Ethereum Shanghai is a buy the news event because everyone thinks it is a sell the news event” pic.twitter.com/TpyL1TDnPj

— HORSE (@CanteringClark) April 9, 2023

Using a meme, trader CanteringClark is likely expressing dissatisfaction with the theory, but to invalidate the hypothesis, one must investigate potential reasons for ETH’s underperformance other than the much anticipated hard fork.

For starters, the Ethereum network’s average transaction fee has been above $5 for the past five weeks, and the Shapella fork does not address the issue, despite minor improvements. This alone lowers the chances of a bullish breakout following the upgrade, as most decentralized applications (DApps) and projects will continue to prefer second-layer and competing networks.

Furthermore, volume at Ethereum-based decentralized exchanges (DEX) has fallen by 84% since a weekly peak of $38.2 billion on March 5. The most recent data for the week ending April 2 was $6.4 billion, according to DefiLlama. In the same period, competing blockchains saw 60% lower volumes on average, a sign that Ethereum lost market share.

According to Paul Brody, EY’s global blockchain leader, one reason for Ether’s price underperformance relative to Bitcoin could be “the battle to keep Ethereum sufficiently and properly decentralized.” Brody cites exchanges as highly centralized custodial validators, as well as some semi-centralized players and staking pool operations that invest funds from tens of thousands of individual crypto wallets.

Ether derivatives display balanced bets between bulls and bears

Let’s examine Ether derivatives metrics to determine the current market position of professional traders. For example, the open interest in Ether options for the weekly expiry on April 14 is $510 million, with neutral-to-bullish call instruments outnumbering protective put options by 36%.

Those ETH options bulls could come up empty-handed because 60% of their bets were placed at $2,000 or higher. As a result, if Ether’s price remains between $1,800 and $1,900 on April 14 at 8:00 am UTC, the outcome is balanced between call and put options. Furthermore, an expiry price between $1,900 and $2,000 represents a mere $100 million advantage for bulls, which is unlikely to justify the cost of a price pump.

Futures markets should also be examined to determine whether the Shapella hard fork has caused investors to become more risk-averse. Ether quarterly futures are popular among whales and arbitrage desks, and they typically trade at a slight premium to spot markets, indicating that sellers are requesting more money to postpone settlement.

As a result, futures contracts in healthy markets should trade at a 5% to 10% annualized premium — a situation known as contango, which is not unique to crypto markets.

*Ether 3-month futures annualized premium. Source: Laevitas*

The premium on Ether futures is currently 2%, down from 4% the previous week. Despite being below the 5% neutral threshold, it shows no excessive short demand.

Traders should monitor staking unlock requests

Based on Ether derivatives, there is no reason to believe professional traders expect a significant price correction as a result of the staking unlock. Nonetheless, given the high transaction fees and declining DEX activity, the chances of a “buy the news” event are slim.

Professional traders would have used derivatives instruments to bet against Ether’s price because the event was widely publicized, which hasn’t happened given the ETH futures’ premium. There are no obvious reasons for a rally, but derivatives traders do not anticipate any panic selling. So, unless the number of staking unlock requests significantly increases, Ether should remain near $1,900 for the foreseeable future.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin derivatives favor further BTC price rally toward $30K

Bitcoin’s price might have held near $28,000, but the absence of shorts using margin and futures markers is a bullish indicator.

Despite regulatory pressure and worsening macroeconomic conditions, Bitcoin (BTC) demonstrated bullishness, holding near $28,000 for the past week. Furthermore, professional traders have maintained leveraged long positions on margin and in futures markets, indicating strength.

On the regulatory front, on April 4, the Texas Senate Committee on Business and Commerce agreed to move forward and remove incentives for miners operating within the state’s regulatory environment. If passed, Senate Bill 1751 would cap compensation for load reductions on Texas’ power grid during emergencies.

Risk of recession grows against rate hikes

The risk of a recession in the United States grew after applications for unemployment benefits in the week ending March 25 were revised to 246,000, up 48,000 from the initial report.

Furthermore, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), stated on April 6 that the economies of the U.S. and Europe should continue to struggle as higher interest rates weigh on demand.

Regarding the banking crisis, Georgieva advised central banks to keep raising interest rates, adding, “Concerns remain about vulnerabilities that may be hidden, not just at banks but also non-banks — now is not the time for complacency.“

On the other hand, on April 6, St. Louis Federal Reserve president James Bullard downplayed concerns about the impact of financial stress on the economy. Bullard stated that the Fed’s reaction to the banking sector’s weakness was “swift and appropriate,” and that “monetary policy can continue to put downward pressure on inflation.“

Let’s look at derivatives’ metrics to better understand how professional traders are positioned in the current market conditions.

BTC price derivatives reflect traders’ neutral sentiment

Margin markets provide insight into how professional traders are positioned because they allow investors to borrow cryptocurrency to leverage their positions.

For example, one can increase exposure by borrowing stablecoins and buying Bitcoin. On the other hand, borrowers of Bitcoin can only take short bets against BTC/USD.

The chart above shows that OKX traders’ margin lending ratio has remained near 28x in favor of BTC longs over the last week. If those whales and market makers had perceived increased risks of a price correction, they would have borrowed Bitcoin for shorting, causing the indicator to fall below 20x.

The top traders’ long-to-short net ratio excludes externalities that might have solely impacted the margin markets. Analysts can better understand whether professional traders are leaning bullish or bearish by aggregating the positions on the spot, perpetual and quarterly futures contracts.

Because there are some methodological differences between different exchanges, viewers should focus on changes rather than absolute figures.

*Exchange’s top traders’ long-to-short ratio. Source: Coinglass*

Between April 1 and April 7, the top traders’ long-to-short ratio at Binance slightly declined from 1.17 to 1.09. Meanwhile, at the Huobi exchange, the top traders’ long-to-short ratio has stood near 1.0 since March 18. More precisely, the ratio slid from 1.00 on April 1 to 0.95 on April 7, thus relatively balanced between longs and shorts.

Lastly, OKX whales presented a very different pattern as the indicator declined from 1.25 on April 3 to a 0.69 low on April 5, heavily favoring net shorts. Those traders reverted the trend, aggressively buying Bitcoin using leverage for the past two days as the long-to-short ratio returned to 0.97.

Absence of Bitcoin shorts is a bullish indicator

In essence, both the Bitcoin margin and futures markets are currently neutral, which should be interpreted positively given that the Bitcoin price rose 41.5% between March 10 and March 20, holding the $28,000 level.

Given the enormous regulatory uncertainty caused by the SEC’s Wells notice against Coinbase on March 22, the absence of shorts using margin and futures markets currently favors further price appreciation.

Unless the economic crisis unfolds faster than expected, inflation will remain a top concern for investors, and Bitcoin inflows should be enough to keep $28,000 as a resistance level.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ethereum bulls ignore regulatory action against exchanges by preparing for the Shapella hard fork

ETH investors appear unconcerned about the regulatory challenges facing the crypto market and are instead selecting to focus on the network’s next upgrade.

For the past twelve days, the price of Ether (ETH) has been trading in a narrow descending range. Surprisingly, not even the news of Binance and Changpeng “CZ” Zhao being sued by the Commodity Futures Trading Commission (CFTC) was enough to break the support level.

*Ether (ETH) price index in USD, 12-hour. Source: TradingView*

The lawsuit, filed on March 27, claimed that Binance provided derivatives trading services to United States-based customers without first obtaining a derivatives license. Additionally, the U.S. Securities and Exchange Commission served Coinbase with a Wells notice on March 22.

Even if traders saw no reason to reduce their Ether positions due to increased regulatory risk, Binance holds 35% of the open interest in Ether futures. Therefore, if traders are suddenly compelled to liquidate their positions or if there is a sudden reduction in liquidity after U.S. entities are effectively barred from Binance’s markets, one should anticipate a significant impact on Ether derivatives markets.

One could point to the market’s resiliency after BitMEX derivatives exchange lost its longtime market share advantage following a 30-minute outage in March 2020 during a Bitcoin crash. However, there is no way to predict the outcome of the regulators’ case against Binance, so it would be naive to assume that there is a zero percent chance of a service interruption — even if it means clients can close positions and withdraw assets.

Instead of focusing solely on the ETH price, it is essential to closely monitor Ether derivatives to understand how professional traders will react.

ETH derivatives show increased demand for longs

In healthy markets, the annualized two-month futures premium should trade between 5% and 10% to cover associated costs and risks. However, when the contract trades at a discount (backwardation) relative to traditional spot markets, it indicates traders’ lack of confidence and is regarded as a bearish indicator.

*Ether 2-month futures annualized premium. Source: Laevitas*

On March 29, derivatives traders using futures contracts became slightly more bullish as the indicator moved to 4%. The futures premium reached its highest level in four weeks, despite remaining below the 5% neutral threshold. Those traders became even more confident that the market structure would remain stable.

Still, the increasing demand for leverage longs (bulls) does not necessarily translate to an expectation of positive price action. Consequently, traders should analyze Ether’s options markets to understand how whales and market makers are pricing the odds of future price movements.

Option traders are unfazed by regulators’ actions

The 25% delta skew is a telling sign when market makers and arbitrage desks are overcharging for upside or downside protection.

In bear markets, options investors give higher odds for a price dump, causing the skew indicator to rise above 8%. On the other hand, bullish markets tend to drive the skew metric below -8%, meaning the bearish put options are in less demand.

*Ether 60-day options 25% delta skew: Source: Laevitas*

The delta skew indicator has been neutral since March 22, indicating similar pricing for upside and downside options. However, given that Ether’s price is nearing its highest level in seven months, at $1,800, one would expect the protective put options to trade at a premium — which is not the case.

Given the increased regulatory pressure on Coinbase and Binance, it is clear that the derivatives markets are signaling confidence. The bullish momentum for Ether could also be linked to the Shapella fork being confirmed for April 12. Validators will be able to withdraw their ETH coins from the Beacon Chain once the Ethereum Improvement Proposal EIP-4895 becomes active.

Options and futures markets indicate that professional traders are unconcerned about regulators’ actions against Binance and Coinbase. Those who believe the descending channel pattern will break to the upside have a solid claim.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Bitcoin bulls remain bullish, but macro and crypto-specific hurdles have BTC pinned below $30K

All the pieces are in place for BTC to rally to $30,000, but escalating economic uncertainty and regulatory pressure add strength to the key resistance level.

On March 23, Bitcoin (BTC) price recovered the $28,000 support after a brief correction below $27,000. The movement closely tracked the traditional financial sector, particularly the tech-heavy Nasdaq Index, which gained 2.1% as Bitcoin surpassed the $28,000 threshold.

On March 22, the Federal Reserve raised its benchmark interest rate by 0.25% but hinted that it is nearing its maximum level for 2023. In the end, however, Fed Chair Jerome Powell stated that it is too soon to determine the extent of the tighter credit conditions, so monetary policy will remain flexible.

Initially, it appears encouraging that the central bank is less inclined to increase the cost of money. However, global economies are exhibiting signs of stress. For instance, consumer confidence in the euro area decreased by 19.2% in March, reversing five consecutive months of gains and defying economists’ predictions of an improvement.

The recession is still putting pressure on companies’ profits and leading to layoffs. For example, on March 23, professional services company Accenture said it would end the contracts of 19,000 workers over the next 18 months. On March 22, the company Indeed, which helps people find jobs, let go of 2,200 workers, or 15% of its staff.

The stronger the correlation to traditional markets, the less likely a decoupling. As a result, according to futures and margin markets, the Bitcoin price increase has not instilled much confidence in professional traders.

Bulls and bears exhibit a balanced demand on margin markets

Margin trading allows investors to borrow cryptocurrency to leverage their trading position, potentially increasing their returns. For example, one can buy Bitcoin by borrowing Tether (USDT), thus increasing their crypto exposure. On the other hand, borrowing Bitcoin can only be used to bet on a price decline.

Unlike futures contracts, the balance between margin longs and shorts isn’t necessarily matched. When the margin lending ratio is high, it indicates that the market is bullish. The opposite, a low lending ratio, signals that the market is bearish.

*OKX USDT/BTC margin lending ratio. Source: OKX*

On March 15, the margin markets longs-to-short indicator at the OKX exchange peaked at 60, but by March 17, it had fallen to 22. This indicates that during the rally, reckless leverage was not used. Historically, levels above 40 indicate a highly imbalanced demand favoring longs.

The indicator is currently at 19, indicating a balanced situation given the high cost of borrowing U.S. dollars (or stablecoins) to short BTC, which stands at 15%.

Long-to-short data shows reduced demand for leverage longs

There are occasional methodological discrepancies between different exchanges, so viewers should monitor changes instead of absolute figures.

Between March 18 and March 22, the top traders’ long-to-short ratio at OKX increased, peaking at 1.09, but reversed course on March 23. The indicator is currently at its lowest level in 11 days, at 0.76. Meanwhile, at the Huobi exchange, the top traders’ long-to-short ratio has stood flat near 1.0 since March 18.

Lastly, Binance whales have consistently been reducing their leverage longs since March 17. More precisely, the ratio dropped from 1.36 to 1.09 on March 23, its lowest level in 11 days.

As Bitcoin has gained 13% since March 16, margin and futures markets indicate that whales and market makers were ill-prepared. This may initially appear bearish, but if the $28,000 support level holds, professional traders will likely be compelled to add long positions, further accelerating the bullish momentum.

Bitcoin derivatives ultimately exhibit no signs of stress. Not having excessive leverage on long positions is positive, and bears did not dare to add short positions. Nonetheless, recession risks and growing regulatory uncertainty, such as the United States Securities and Exchange Commission‘s Wells notice against the Coinbase exchange on March 22, will likely keep the price of Bitcoin below $30,000 for a while.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Betting on turmoil: Deribit launches Bitcoin volatility futures

Volatility products are popular with traditional investors, as they enable portfolio hedging, risk management and speculation.

Crypto derivatives exchange Deribit will soon launch Bitcoin (BTC) volatility futures, giving investors a direct way to measure and trade BTC market volatility.

On March 17, Deribit introduced BTC DVOL futures — a derivatives contract built on the Deribit Bitcoin Volatility Index, which measures the implied volatility of the largest cryptocurrency. Deribit’s volatility gauge provides a 30-day outlook on investors’ expectations for annualized volatility.

Like other volatility products, BTC DVOL can potentially help traders with risk management, portfolio hedging or market speculation.

Volatility-as-an-asset is widely traded in traditional finance, with the most popular product being the Chicago Board Options Exchange Volatility Index, also known as VIX. The VIX fluctuates on a scale of 1–100, with 20 representing the historical average. Readings below 20 signal lower implied volatility than the historical mean. Readings above 20 are usually associated with more turbulent financial conditions, while anything above 30 signals significant market volatility, usually due to uncertainty, risk or investor fear.

VIX measures the volatility of S&P 500 index options, a leading indicator of the U.S. stock market.

*Traditional markets have battled extreme volatility over the past 12 months, marked by major fluctuations in the S&P 500 index and broader stock market. Source: Yahoo Finance*

Bitcoin and the broader crypto markets have exhibited extreme volatility over the past 12 months. The period known as crypto winter is usually associated with deep corrections in digital asset prices following an over-extended bullish phase.

Although crypto investment products experienced record outflows last week following the collapse of Silicon Valley Bank and Signature Bank, regulatory clarity on investor deposits has helped Bitcoin stage a large relief rally. Bitcoin’s price crossed $27,000 on March 17 for the first time in over nine months.