The strong momentum that pushed the price of Bitcoin (BTC) to a year-to-date high continued into its third week as the price pushed towards the $35,000 level.
Some notable developments supporting the current strong momentum are:
- The formation of a golden cross between the 50-day moving average and the 200-day moving average on the daily time frame.
- DecenTrader and Kingfisher liquidity maps highlight the possibility of a bearish squeeze between $36,300 and $40,000 if Bitcoin price manages to break above the $36,300 level.
Still good amount of liquidity for #bitcoin between current prices up to $39,500.
Follow it here: https://t.co/s1yivlKw5D pic.twitter.com/2i09F7Z9We
— Decentrader (@decentrader) October 26, 2023
- Options market data highlights a shift in investor sentiment and positioning.
Bitcoin options data appears to be consistent with the view that there may be further price increases and suggests a possible extension of last week’s gamma event that ended BTC’s price rally in $35,280. The data also shows the possibility of a gamma event in the $35,000 to $40,000 range, and the investor’s position changes accordingly.
Last week, daily options volume in the derivatives market increased, prompting The Big Picture podcast host Joe Kruy to say:
“Paradigm had its best day ever with a 70% increase in volume terms.”
Adding to the conversation about the Bitcoin options market, Kelly Greer, Director of American Sales at Galaxy, said:
“The flows we’ve seen reflect everything described here and what’s in the market in the listed space. A month-on-month rebound from the third to the fourth quarter, interest in the calls we’ve highlighted and when we started to highlight This short gamma, the remarkable difference between Bitcoin and ETH at the beginning of October, is really the first time we started talking about it. range and we saw the chasing area. And saw the spot price settle at about $30 – when we started talking about it, about $25. We’re seeing interest on the upside now that volatility is higher and calls are higher. We’re looking at strikes that spread so the peak gamma at the time we talked about it in early October was around $32,000 and now it’s around $36,000 to $40,000”.
From the point of view of technical analysis, traders look at the bullish pennant pattern formed in the daily time frame, along with the birth of a golden cross.
In the short term, the catalytic move to watch is whether a price move through the $36,300 level triggers an increase in short pressure, and whether it triggers a strong rebound in spot buying volumes. their positions or face liquidation.
In fact, we see liquidations of aggregate short positions increase as volumes peak, a process documented in the chart below.
According to Alex Thorn, Head of Firmwide Research at Galaxy, “last week’s Bitcoin gamma compression could happen again if the BTC / USD pair moves higher to $35,750 – $36,000.”
Thorn explained that:
“Options traders need to buy $20 million worth of BTC spot for every 1% increase, which could cause an explosion if we start to rally to that level.”