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A crumbling stock market could create profitable opportunities for Bitcoin traders

U.S. tech giants are set to report their second quarter earnings throughout October, presenting a scenario that could possibly benefit Bitcoin.

Some of the biggest companies in the world are expected to report their 2Q earnings in October, including electric automaker Tesla on Oct. 18, tech giants Meta and Microsoft on Oct. 24, Apple and Amazon on Oct. 26 and Google on Oct. 30. Currently, the possibility of an even more severe global economic slowdown is in the cards and lackluster profits could further add to the uncertainty.

Given the unprecedented nature of the United State Federal Reserve tightening and mounting macroeconomic uncertainties, investors are afraid that corporate profitability will start to deteriorate. In addition, persistent inflation continues to force businesses to cut back on hiring and adopt cost-cutting measures.

Strengthening the dollar is particularly punitive for U.S. listed companies because their products become more expensive in other countries and the reduced revenue brought in from overseas negatively impacts the bottom line. Google, for instance, is expected to grow revenues by less than 10%, down from a 40% growth in 2021.

The companies that comprise the S&P 500 account for an aggregate $32.9 trillion in value and crypto investors expect some of those bets to enter Bitcoin (BTC) if earnings season fails to sustain a modest growth — signaling the stock market should continue to underperform.

From one side, traders face the pressure from Bitcoin’s correlation to equities, but on the other hand, BTC’s scarcity might shine as inflation concerns arise. This possibly creates an immense opportunity for those betting on a BTC price rally, but extreme caution would also be needed for those opening positions.

Risk averse traders could use futures contracts to leverage their long positions but they also risk being liquidated if a sudden negative price move occurs ahead of the corporate earnings calendar. Consequently, pro traders are more likely to opt for options trading strategies such as the "long butterfly."

By trading multiple call (buy) options for the same expiry date, traders can achieve gains thre times higher than the potential loss. This options strategy allows a trader to profit from the upside while limiting losses.

It is important to remember that all options have a set expiry date, so the asset's price appreciation must happen during the defined period.

A cautionary approach to using call options

Below are the expected returns using Bitcoin options for the Oct. 28 expiry, but this methodology can also be applied using different time frames. While the costs will vary, the general efficiency will not be affected.

Profit / Loss estimate. Source: Deribit Position Builder

This call option gives the buyer the right to acquire an asset, but the contract seller receives (potential) negative exposure. The "long butterfly" strategy requires a short position using a call option, but the trade is hedged on both sides — limiting the exposure.

To initiate the execution, the investor buys 13 Bitcoin call options with a $20,000 strike and sells 24 contracts of the $23,000 call. To finalize the trade, one would buy 10.5 BTC contracts of the $26,000 call options to avoid losses above such a level.

Derivatives exchanges price contracts in BTC terms, and $19,222 was the price when this strategy was quoted.

Using this strategy, any outcome between $20,690 (up 7.6%) and $26,000 (up 35.3%) yields a net profit — for example, the optimal 20% price increase to $23,000 results in a 1.36 BTC net gain, or $24,782 at current levels. Meanwhile, the maximum loss is 0.46 BTC or $8,382 if the price on Oct. 28 expiry happens below $20,000.

The "long butterfly" strategy provides a potential gain that is three times larger than the maximum loss.

Overall, the trade yields a better risk-to-reward outcome than leveraged futures trading, especially considering the limited downside. It certainly looks attractive for those expecting deteriorating business conditions for listed companies.

It is worth highlighting that the only up front fee required is 0.46 BTC, which is enough to cover the maximum loss.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Basel Committee crypto asset prudential treatment proposals get detailed responses

Upside capped at $980B total crypto market, according to derivatives metrics

A bearish formation in the total market capitalization chart has been gaining strength after two failures to break its resistance level.

It is becoming increasingly challenging to support a bullish short-term view for cryptocurrencies as the total crypto market capitalization has been below $1.4 trillion for the past 146 days. Furthermore, a descending channel initiated in late July has limited the upside after two strong rejections.

Total crypto market cap, USD. Source: TradingView

The 1% weekly negative performance in cryptocurrency markets was accompanied by stagnation in the S&P 500 stock market index, which remained basically flat at 3,650. Uncertainty continues to limit the eventual recovery as worsening global economic conditions have caused trans-Pacific shipping rates to plunge 75% versus the previous year, forcing ocean carriers to cancel dozens of sailings.

Conflicting macroeconomic signals limit risk market upside

From one side, the global macroeconomic scenario improved after the United Kingdom's government reverted plans to cut income taxes on Oct. 3. On the other hand, investors' fear increased as global investment bank Credit Suisse's credit default swaps reached their highest level on Oct. 3. Such instruments allow investors to protect against default, and their cost surpassed levels seen at the height of the 2008 financial crisis.

Below is a list of the winners and losers of the crypto market capitalization's 1% loss to $935 billion. Bitcoin (BTC) stood out with a 1% gain, which led its dominance rate to hit 41.5%, the highest since Aug. 5.

Weekly winners and losers among the top-80 coins. Source: Nomics

Quant (QNT) jumped 15% on speculation that its interoperable blockchain protocol would find adoption across governmental and regulatory bodies.

Maker (MKR) gained 10.6% after MakerDAO launched a proposal to decrease the stability fee for the Curve protocol staked Ether (ETH) pool.

UniSwap Protocol (UNI) gained 10.6% after UniSwap Labs, a startup contributing to the protocol, reportedly raised over $100 million from venture capitalists.

Still, a single week of negative performance is not enough to interpret how professional traders are positioned. Those interested in tracking whales and market markers should analyze derivatives markets.

Derivatives markets point to further downside

For instance, perpetual futures, also known as inverse swaps, have an embedded rate usually charged every eight hours. Exchanges use this fee to avoid exchange risk imbalances.

A positive funding rate indicates that longs (buyers) demand more leverage. However, the opposite situation occurs when shorts (sellers) require additional leverage, causing the funding rate to turn negative.

Accumulated 7-day perpetual futures funding rate on Oct. 3. Source: Coinglass

Perpetual contracts reflected neutral sentiment as the accumulated funding rate was relatively flat in most cases over the past seven days. The only exception was Ether Classic (ETC), although a 0.50% weekly cost to maintain a short (bear) position should not be deemed relevant.

Since Sept. 26, the yields on the U.S. Treasury's 5-year notes declined from 4.2% to 3.83%, indicating investors are demanding fewer returns to hold extremely safe assets. The flight-to-quality movement shows how risk-averse traders are as mixed sentiment emerges from lackluster economic indicators and corporate earnings.

For this reason, bears believe that the prevailing longer-term descending formation will continue in the upcoming weeks. In addition, professional traders' lack of interest in leveraging cryptocurrency longs (buys) is evident in the neutral futures funding rate. Consequently, the current $980 billion market capitalization resistance should remain strong.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Basel Committee crypto asset prudential treatment proposals get detailed responses

What remains in the NFT market now that the dust has settled?

From profile pictures to celebrity endorsements, NFT space has changed a lot since the market boom in 2021.

Over the last two years, nonfungible tokens (NFTs) have emerged as one of the most active and noticeable aspects of Web3.

The data stored on blockchains by NFTs may be connected with files that include various forms of media, such as photographs, videos and audio. In certain instances, it can even be related to physical items. The owner of an NFT will often have ownership rights over the data, material or item connected with the token, and these tokens are typically purchased and traded on specialized markets. The rise of NFTs was meteoric in 2021, but it hasn’t been very steady since then, and it seems to have fallen sharply in 2022

Why NFTs exploded in popularity in 2021

In 2021, two of the most active markets for NFTs were collectible art projects and the video game industry. NFTs have ushered in a new era of video gaming, which has resulted in the proliferation of new types of games, such as blockchain-based play-to-earn games that provide players with in-game benefits. Users now have the opportunity to own in-game assets for the first time and make a possible profit from such assets by trading them on NFT platforms like OpenSea.

Axie Infinity, a game that included both NFTs and its own native cryptocurrency, became the most popular crypto game overall. Axie’s NFT market reached a milestone of $1 billion in total trading volume. In addition, the game accounted for two-thirds of blockchain-game NFT transactions in 2021, according to a report covered by Cointelegraph in March this year.

The gaming industry can help to bring NFTs into the mainstream due to their massive popularity. Pavel Bains, executive producer of Mixmob — a card strategy racing game — told Cointelegraph:

“NFTs within crypto gaming are a massive tool, probably one of the top three driving forces in crypto mainstream adoption. Right now, the biggest roadblock we’re facing is that the games aren’t very fun to play. Some will say, ‘Oh, the onboarding experience is bad... Using a crypto wallet isn’t ideal. You need to abstract it away.’ I don’t believe that. Kids will go through pain to get what they want if it’s fun.”

Fear of missing out also seemed to play a major role, with the massive success of picture-for-proof collections like the Bored Ape Yacht Club (BAYC) soaring from a mint price of $300 to up to $3.4 million for a rare golden ape.

No matter what it is, there are usually two types of adopters: those who see the potential in a trend and are willing to stick with it and those who join in because everyone else is doing it. NFTs are no different.

How NFTs have fared in 2022

NFT sales stayed fairly strong in the first half of 2022, with crypto users spending $2.7 billion on minting NFTs during that period. However, despite a strong start to the year, there have been some negatives within the NFT space.

Earlier this year, the floor prices for BAYC dropped below $100,000, only to recover, with the cheapest Bored Ape recently selling for 73 Ether (ETH) ($125,000) on OpenSea.

Recent: Music NFTs a powerful tool to transform an audience into a community

This year also saw users losing their Bored Apes due to user error. “Fat finger” errors have led to Bored Apes worth hundreds of thousands being sold for far less. For example, Ape #835 sold for 115 Dai on March 28 this year, with Ape #6462 selling for 200 USD Coin (USDC) on May 15.

In September, daily NFT trading volume on OpenSea was down nearly 99% from its May 1 peak of $405.75 million, with a daily volume of $10.29 million at publishing time. When it comes to individual collections, BAYC currently has a daily trading volume of only $400,000, according to DappRadar. According to the decentralized application explorer, CryptoPunks has no trading volume as of 7:20 a.m. UTC Oct. 3.

Due to current market conditions, one can expect to see fluctuations in the value of NFT projects, according to experts. Yaroslav Shakula, CEO of Yard Hub — a framework for NFT, Web3 and blockchain entrepreneurial ideas — told Cointelegraph:

“NFTs have surely been affected by the bear market but, in many cases, less severely than classic crypto and altcoins. What will happen next depends on the global political and macroeconomic situation. All tech stocks and risky assets are now tanking against the U.S. dollar, so in a short- and mid-term period, one might expect fluctuations in NFT prices as well.”

Despite these low volumes, NFTs continue to enjoy significant visibility.

Many people may have noticed a dramatic increase in the amount of people’s profile pictures on Instagram and Twitter that include a monkey, bear or other NFT image.

In January this year, Twitter announced that users would be able to officially use NFTs as their profile pictures via Twitter Blue. The premium, subscription-based version of Twitter allows users to connect their wallets and post a hexagon-shaped profile picture once an NFT is connected. Meta quickly followed Twitter’s lead and implemented a similar feature for Instagram and Facebook.

Celebrities continue to be involved in the NFT space, with Snoop Dogg recently collaborating with Mobland, a mafia-themed metaverse, to create digital weed farm NFTs. The weed farms were developed as a part of NFT 3.0, the third generation of NFTs.

The future of NFTs 

Not only do some industry professionals feel that the NFT market will continue to exist, but they also anticipate that it will continue to expand and play an increasingly crucial role in the digital economy. According to a report covered by Cointelegraph, the NFT market could be worth $231 billion by 2030. This is due to continued adoption within the video game, music, art and digital collectible industries.

Shakula is bullish on NFTs for the long-term, telling Cointelegraph, “In the long-term, NFTs definitely look good — I’m sure they have a big future. This technology opens many new opportunities, even for classic businesses and common users. They can be used for tokenizing assets and providing them to employees as perks and benefits.”

Experts also believe that our lives will become more virtual in the coming years. It’s possible that in the near future, people will be able to carry out their daily activities within a virtual space, using virtual assets. Essentially, this will represent the creation of a metaverse in which everything is transformed into an NFT token. Although it is unknown how this will coexist with our physical life in the “real world,” the revolution is already well on its way to being realized.

Recent: Terra could leave a similar regulatory legacy to that of Facebook’s Libra

Some experts believe that NFTs will soon reach mainstream status. Jack Vinijtrongjit, CEO of AAG — a Web3 development firm — told Cointelegraph, “NFTs are evolving from just being a collectible and speculative tool to real world use cases, such as identity and customer relationship management. We can already see companies like Starbucks using it as a replacement for their membership card and universities issuing NFTs for a diploma. I believe we are about to see NFTs moving from niche to mainstream as the result.”

The reaction of the video game industry to the introduction of NFTs has been the subject of much conjecture. Although some businesses are currently delivering digital assets as a part of blockchain games like Ember Sword, the widespread adoption of this technology has not yet occurred in the gaming community, leading many specialists to wonder how or even whether they will take off in the mainstream gaming industry.

Basel Committee crypto asset prudential treatment proposals get detailed responses

9 Out of the Top 12 Crypto Assets Are Down 70% to 90% Lower Than the All-Time Highs Recorded Last Year

9 Out of the Top 12 Crypto Assets Are Down 70% to 90% Lower Than the All-Time Highs Recorded Last Year274 days or roughly nine months ago, the crypto economy was worth $2.34 trillion and at $967 billion the aggregate value of all 13,192 crypto assets is $1.48 trillion less. Most of the top digital currencies tapped an all-time price high in November 2021 and today, a great majority of the top crypto assets are […]

Basel Committee crypto asset prudential treatment proposals get detailed responses

Next few weeks are ‘critical’ for stock market and Bitcoin, analyst says

Alessio Rastani, a cryptocurrency analyst and trader, shares his outlook on crypto, stocks and the forex market for the next weeks.

The stock market’s movements in the next few weeks will be critical for determining whether we are heading towards a short-term recession or a long term-one, according to forex trader and crypto analyst Alessio Rastani.

During the October-December 2022 period, the analyst expects to see the S&P rallying. "If that bounces or rally fails and drops back down again, then very likely, we're entering a long-term recession and something very close to similar to 2008", said Rastani in the latest Cointelegraph interview.

According to the analyst, such a recession could last until 2024 and would inevitably negatively impact the price of Bitcoin (BTC). 

Talking about the latest Pound sterling crisis, Rastani opined that its principal cause is the rally of the U.S. dollar, which is putting pressure on most other fiat currencies, including the yen and the euro. However, in Rastani's view, the U.S. dollar is approaching the top.

"Once we see a clean break, a sustained break of 111.5 and 110 levels on the dollar index, then I think the top is in for the dollar. And then I'm looking for a multi-month decline in the dollar back to 104 to the 100 level on the dollar index," he explained. 

Check out the full interview on our YouTube channel and don’t forget to subscribe!

Basel Committee crypto asset prudential treatment proposals get detailed responses

Despite the Crypto Market Downturn, DAO Treasuries Grew by $700 Million Since January

Despite the Crypto Market Downturn, DAO Treasuries Grew by 0 Million Since JanuarySince January 2022, the entire crypto economy has shed $1.36 trillion in value, as the market capitalization dropped from $2.34 trillion to today’s $979 billion. While the crypto economy is down in value, trade volumes are lower, and the value locked in decentralized finance (defi) has shed billions, treasuries held by decentralized autonomous organizations (DAOs) […]

Basel Committee crypto asset prudential treatment proposals get detailed responses

Price analysis 9/30: SPX, DXY, BTC, ETH, BNB, XRP, ADA, SOL, DOGE, DOT

Equities markets have extended their decline, but Bitcoin and select altcoins have not given up much ground, leading some traders to believe that the bottom is in.

The United States equities markets have been under a firm bear grip for a large part of the year. The S&P 500 and the Nasdaq Composite have declined for three quarters in a row, a first since 2009. There was no respite in selling in September and the Dow Jones Industrial Average is on track to record its worst September since 2002. These figures outline the kind of carnage that exists in the equities market.

Compared to these disappointing figures, Bitcoin (BTC) and select altcoins have not given up much ground in September. This is the first sign that selling could be drying up at lower levels and long-term investors may have started bottom fishing.

Daily cryptocurrency market performance. Source: Coin360

In the final quarter of the year, investors will continue to focus on the inflation data. Any indication of inflation topping could bring about a sharp recovery in risk assets, but if inflation remains stubbornly high, then a round of sell-offs could follow.

Let’s study the charts of the S&P 500 index, the U.S. dollar index (DXY) and the major cryptocurrencies to determine if a recovery is on the cards.

SPX

The S&P 500 index (SPX) has been under intense selling pressure for the past few days but the bulls have held their ground. This indicates that bulls are buying the dips near 3,636.

SPX daily chart. Source: TradingView

The first resistance on the upside is 3,737. If bulls thrust the price above this level, the index could rise to the 20-day exponential moving average (EMA) (3,818). In a downtrend, this is the important level to keep an eye on because a break and close above it will suggest that the bears may be losing their grip.

Sharp declines are usually followed by strong rallies. That could carry the index to the downtrend line and then to the 50-day simple moving average (SMA) (4,012).

The bears are likely to have other plans. They will try to extend the downtrend by sinking and sustaining the price below 3,636. If they manage to do that, the index could plummet to 3,500 and later to 3,325.

DXY

The U.S. dollar index surged to 114.77 on Sept. 28, which pushed the relative strength index (RSI) into deeply overbought territory. This may have attracted profit-booking by the short-term traders that pulled the price near the 20-day EMA (111).

DXY daily chart. Source: TradingView

The bears will have to yank the price below the 20-day EMA to suggest that the bullish momentum could be weakening. That could clear the path for a possible drop to the 50-day SMA (108).

The zone between the 50-day SMA and the uptrend line is likely to witness aggressive buying by the bulls because if they fail to defend the zone, it will indicate that the index may have topped out.

On the other hand, if the price turns up from the current level or rebounds off the 20-day EMA, it will indicate that the bulls continue to buy on dips. Buyers will then again attempt to thrust the price above 114.77 and resume the uptrend. The next target objective on the upside is 118.

BTC/USDT

Bitcoin bounced off the strong support at $18,626 on Sept. 28, indicating that the bulls continue to fiercely defend this level. The long tail on the candlestick of the past two days shows that bulls are buying the intraday dips.

BTC/USDT daily chart. Source: TradingView

The bulls pushed the price above the 20-day EMA ($19,602) on Sept. 30 but are struggling to sustain the higher levels. This shows that bears are selling near the 50-day SMA ($20,621).

If bulls do not allow the price to drop below the 20-day EMA, the likelihood of a rally to the downtrend line increases. The bears are expected to mount a strong resistance at this level but if bulls clear this hurdle, the BTC/USDT pair could signal a short-term trend change. The pair could then rise to $22,799.

Contrary to this assumption, if the price turns down from the current level or the 50-day SMA ($20,625), the pair could again drop to the $18,626 to $17,622 support zone.

ETH/USDT

Ether (ETH) has been declining in a descending channel pattern for the past several days. In the short term, the price has been stuck between $1,250 and $1,410, indicating demand at lower levels but selling near the resistance.

ETH/USDT daily chart. Source: TradingView

The price action inside the range is usually random and volatile. Hence, it is difficult to predict the direction of the breakout with certainty.

If the price breaks above $1,410, it will suggest that the bulls have absorbed the supply. That could propel the price to the resistance line of the channel. The bulls will have to overcome this barrier to suggest a potential trend change.

On the other hand, if the price turns down and breaks below $1,250, the bears will attempt to cement their advantage by pulling the ETH/USDT pair below the channel. If they succeed, the pair could drop to $1,000.

BNB/USDT

BNB turned up sharply from $266 and broke above the 20-day EMA ($278) on Sept. 28. This indicates that lower levels are attracting strong buying by the bulls.

BNB/USDT daily chart. Source: TradingView

The bulls pushed the price above the resistance line of the descending channel on Sept. 29 but are facing resistance at the 50-day SMA ($288). If bulls do not allow the price to plummet back below the 20-day EMA, it will improve the prospects of a break above the 50-day SMA. The BNB/USDT pair could then rally to $300 and later to $338.

On the contrary, if the price turns down and breaks below the 20-day EMA, it will suggest that bears continue to sell at higher levels. The pair could then decline to the strong support at $258.

XRP/USDT

XRP rebounded off the 20-day EMA ($0.43) on Sept. 28, indicating a change in sentiment from selling on rallies to buying on dips. However, the bears are unlikely to give up as they will try to stall the recovery in the $0.52 to $0.56 zone.

XRP/USDT daily chart. Source: TradingView

If buyers do not give up much ground from the current level, the possibility of a break above the overhead zone increases. A break above $0.56 will signal the resumption of the uptrend. The XRP/USDT pair could then rise to $0.66.

Conversely, if the price continues lower, the pair could drop to the breakout level of $0.41. The bulls are likely to defend this level vigorously. If the price rebounds off this level, the pair may enter a range-bound action for a few days.

ADA/USDT

The long tail on Cardano’s (ADA) Sept. 28 and 29 candlestick shows that the bulls bought at lower levels in an attempt to defend the uptrend line. Although the price rose above the uptrend line on Sept. 29, buyers could not sustain the recovery.

ADA/USDT daily chart. Source: TradingView

The price has again tumbled below the uptrend line on Sept. 30. The downsloping moving averages and the RSI in the negative territory suggest that the path of least resistance is to the downside. If the price breaks below $0.42, the ADA/USDT pair could decline to the crucial support at $0.40. The bulls are expected to defend this level with vigor.

Contrarily, if the price turns up from the current level and closes above the uptrend line, it will suggest strong buying at lower levels. The bulls will then again try to push the price above the 20-day EMA ($0.45) and challenge the resistance at the 50-day SMA ($0.47).

Related: Bitcoin surges above $20K after 6% BTC rally gains steam ahead of the monthly close

SOL/USDT

Buyers are attempting to form a higher low in Solana (SOL). The price rebounded off $31.65 on Sept. 28 and reached the 50-day SMA ($34.70) on Sept. 30.

SOL/USDT daily chart. Source: TradingView

The 20-day EMA ($33.30) is trying to turn up and the RSI is just above the midpoint, suggesting that the bulls are attempting a comeback. If the price breaks and sustains above the 50-day SMA, the bullish momentum could pick up and the SOL/USDT pair could rally to $39. The bears are expected to mount a strong resistance at this level.

Alternatively, if the price turns down from the 50-day SMA, the pair could drop to $31.65. A break below this support could sink the pair to $30.

DOGE/USDT

Dogecoin (DOGE) dipped below the 20-day EMA ($0.06) on Sept. 25 and the bears thwarted attempts by the bulls to resume the recovery on Sept. 27.

DOGE/USDT daily chart. Source: TradingView

The 20-day EMA is flattish and the RSI is just below the midpoint, indicating a balance between supply and demand. This balance could tilt in favor of the bears if they sink the price below the support near $0.06. The price could then plunge to $0.05.

The bulls will gain the upper hand if they drive and sustain the price above the 50-day SMA ($0.06). The DOGE/USDT pair could then attempt a rally to $0.07 where the bears may again mount a stiff resistance.

DOT/USDT

Polkadot (DOT) has been trading in a tight range between $6 and $6.64 for the past few days. This indicates a tough battle between the bulls and the bears.

DOT/USDT daily chart. Source: TradingView

The gradually downsloping moving averages and the RSI in the negative territory suggest that bears have a slight edge. If the price drops below $6, the DOT/USDT pair could start the next leg of the downtrend. The pair could then slide to $4.

To invalidate this negative bias, bulls will have to push and sustain the price above the 20-day EMA ($6.64). If they do that, it will suggest that the consolidation near the support may have been an accumulation phase. The pair could then rise to the 50-day SMA ($7.26) and later to $8.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.

Market data is provided by HitBTC exchange.

Basel Committee crypto asset prudential treatment proposals get detailed responses

Bitcoin profitability for long-term holders decline to 4-year low: Data

The decline in profitability for long-term holders reached a level last seen during the peak of the bear market in 2018. However, the market bottomed and bounced back during the previous cycle.

Bitcoin’s (BTC) long-term profitability has declined to levels last seen during the previous bear market in December 2018. According to data shared by crypto analytic firm Glassnode, BTC holders are selling their tokens at an average loss of 42%.

Bitcoin long term holders. Source: Glassnode

The Glassnode data indicate that long-term holders of the top cryptocurrency selling their tokens have a cost basis of $32,000, meaning the average buying price for these holders selling their stack is above $30,000.

The current market downturn added to the declining profitability can be attributed to several macroeconomic factors. The BTC market still has a heavy correlation with the stock market, especially tech stocks, which are currently seeing an even bigger downtrend than crypto.

The rising inflation added to central banks’ failure to control it has also added to the pain of BTC investors. With much less to invest at their hands, traders and long-term holders are shifting to short-term profitability and less risky assets.

This was evident from the BTC miner sell-offs as well, BTC miners have historically been long-term holders in anticipation of a higher profit. However, the rise in energy costs, added to growing mining difficulty, has narrowed the profit margins of these miners, forcing them to settle for short-term profits.

Related: US Treasury yields are soaring, but what does it mean for markets and crypto?

Bitcoin miner balance has seen large outflows since prices were rejected from the local high of $24.5 thousand, suggesting aggregate miner profitability is still under a degree of stress. While the miner outflow has ranged between 3,000-8,000 BTC, however, market data indicate that a price decline to $18,000 could lead to a monthly outflow of 8,000 BTC.

Bitcoin, the top cryptocurrency, is currently trading in the $19,000-$20,000 range, struggling to conquer the $20,000 resistance despite multiple breakouts above it in the month of September.

Bitcoin miner’s net position change Source: Glassnode

The long-term holder profitability added with miner profitability has reached a multi-year low. However, the levels are quite similar to when the crypto market bottomed out during previous cycles.

Bitcoin is currently trading in the $19,000-$20,000 range, struggling to conquer the $20,000 resistance despite multiple breakouts above it in the month of September. The top cryptocurrency is currently trading at a 70% discount from its market top of $68,789 posted in November last year. 

Basel Committee crypto asset prudential treatment proposals get detailed responses

Pro traders don’t expect Bitcoin to break and hold $20,000 anytime soon

Bears have controlled BTC price by forcing 111 daily closes below $25,000 and derivatives data shows a reversal of this trend is highly unlikely.

One hundred and eleven days have passed since Bitcoin (BTC) posted a close above $25,000 and this led some investors to feel less sure that the asset had found a confirmed bottom. At the moment, global financial markets remain uneasy due to the increased tension in Ukraine after this week’s Nord Stream gas pipeline incident. 

The Bank of England's emergency intervention in government bond markets on Sept. 28 also shed some light on how extremely fragile fund managers and financial institutions are right now. The movement marked a stark shift from the previous intention to tighten economies as inflationary pressures mounted.

Currently, the S&P 500 is on pace for a consecutive third negative quarter, a first since 2009. Additionally, Bank of America analysts downgraded Apple to neutral, due to the tech giant’s decision to scale back iPhone production due to "weaker consumer demand." Lastly, according to Fortune, the real estate market has shown its first signs of reversion after housing prices decreased in 77% of United States metropolitan areas.

Let's have a look at Bitcoin derivatives data to understand if the worsening global economy is having any impact on crypto investors.

Pro traders were not excited by the rally to $20,000

Retail traders usually avoid quarterly futures due to their price difference from spot markets but they are professional traders' preferred instruments because they prevent the fluctuation of funding rates that often occurs in a perpetual futures contract.

Bitcoin 3-month futures annualized premium. Source: Laevitas

The indicator should trade at a 4% to 8% annualized premium in healthy markets to cover costs and associated risks. The chart above shows that derivatives traders have been neutral to bearish for the past 30 days while the Bitcoin futures premium remained below 2% the entire time.

More importantly, the metric did not improve after BTC rallied 21% between Sept. 7 and 13, similar to the failed $20,000 resistance test on Sept. 27. The data basically reflects professional traders' unwillingness to add leveraged long (bull) positions.

One must also analyze the Bitcoin options markets to exclude externalities specific to the futures instrument. For example, 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 12%. On the other hand, bullish markets tend to drive the skew indicator below negative 12%, meaning the bearish put options are discounted.

Bitcoin 30-day options 25% delta skew: Source: Laevitas

The 30-day delta skew has been above the 12% threshold since Sept. 21 and it's signaling that options traders were less inclined to offer downside protection. As a comparison, between Sept. 10 and 13, the associated risk was somewhat balanced, according to call (buy) and put (sell) options, indicating a neutral sentiment.

The small number of futures liquidations confirm traders’ lack of surprise

The futures and options metrics suggest that the Bitcoin price crash on Sept. 27 was more expected than not. This explains the low impact on liquidations. Despite the 9.2% correction from $20,300 to $18,500, a mere $22 million of futures contracts were forcefully liquidated. A similar price crash on Sept. 19 caused a total of $97 million in leverage futures liquidations.

From one side, there's a positive attitude since the 111-day long bear market was not enough to instill bearishness in Bitcoin investors according to the derivatives metrics. However, bears still have unused firepower, considering the futures premium stands near zero. Had traders been confident with a price decline, the indicator would have been in backwardation.

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