Bitcoin

Rocky

Glimpse

So far, Bitcoin has seen significant volatility in the last trading session, hinting at frail investor sentiment. Earlier today, the asset soared to as high as $57,300. However, the asset now appears to have run out of steam after reaching this mark as it trades at $55,966, down by 1.6%. 
This surge in volatility is a sign that the market has become more fearful as<a href="https://www.newsbtc.com/news/bitcoin/bitcoin-starts-july-cpi-data/" target="_blank" rel="noopener "> traders watch several key technical levels</a>. However, the latest data suggests a shift in trader patterns as more defensive strategies are sought. 
Analysts from the ETC Group <a href="https://etc-group.com/blog/regular-updates/ETC_Group_Crypto_Market_Compass_28_2024/" target="_blank" rel="noopener nofollow">report</a> have noted a substantial increase in the open interest in Bitcoin options, pointing towards a strategic preference for <a href="https://www.newsbtc.com/news/bitcoin-strikes-a-chord-at-the-bottom-but-can-it-clear-this-major-resistance/" target="_blank" rel="noopener ">downside protection.</a> This is illustrated by the spike in implied volatility for short-dated options, indicative of more near-term price action. 
<h2 data-id="b0634da8-98ee-4520-a2a8-ab4bc5941939" data-pm-slice="1 1 []">Insights from the Options Market: A Glimpse into Trader Sentiments</h2> 
The Bitcoin options trading market has given a glimpse of the current market mood. Recent data from Deribit show a put-call ratio—a metric that compares the trading volume of put options versus call options—higher than 1, indicating that the market is still <a href="https://www.newsbtc.com/news/2-4-billion-worth-of-bitcoin-exit-the-network-as-bear-market-bites/" target="_blank" rel="noopener ">bearish based</a> on what traders are doing. 
This ratio indicates a higher volume of trades betting on or hedging against a further price drop. The fact that we are seeing such alignment in the market indicates a sizable segment of the market is bracing for the possibility of Bitcoin <a href="https://www.newsbtc.com/news/bitcoin/bitcoin-undervalued-now-industry-expert/" target="_blank" rel="noopener ">continuing its descent</a>. 
ETC Group analysts agree with such a view, noting the peculiar term structure of volatility: higher implied volatilities in short-dated options versus longer-dated ones—a traditional characteristic of excessive bearishness on the market. 
The analysts particularly noted: 
<blockquote>
 Both the spike in put-call volume ratios as well as 1-month 25-delta option skew signalled a significant increase in demand for downside protection. BTC option implied volatilities have also increased slightly during the latest leg down. Implied volatilities of 1-month ATM Bitcoin options are currently at around 50.5% p.a. 
 The term structure of volatility is also inverted now with short-dated options trading at significantly higher implied volatilities than longer-dated options. This tends to be a sign of overextended bearishness in the options market.
</blockquote> 
<h2 id="navigating-through-market-uncertainty">Navigating Through Market Uncertainty</h2> 
These dynamics are being felt heavily in the market, with many prominent voices commenting on potential pathways for Bitcoin. 
Long-time trader Peter Brandt hints he expects Bitcoin to form a double top setup, a bearish flag implying price drawdowns as deep as even $44K. Brandt, however, also accepts that the construction might not meet all requirements of a technical pattern and allows for <a href="https://www.newsbtc.com/analysis/btc/bitcoin-price-downtrend-54k/" target="_blank" rel="noopener ">different price consequences</a>. 
A more positive view comes from Timothy Peterson. He said that as Bitcoin can end July above $50,000, it has a “strong chance” of either hanging onto or even increasing in value into October. 
According to Peterson, the chances are 60% that Bitcoin could trade quarter in the coming months and a 25% chance that Bitcoin will cross its all-time highs within the next three months. 
<img loading="lazy" decoding="async" class="size-medium" src="https://www.tradingview.com/x/EpBSat7Y/" alt="Bitcoin (BTC) price chart on TradingView" width="2770" height="1496"> 
Featured image created with DALL-E, Chart from TradingView

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