Bitcoin price drops to $100.3K after Fed rate cut and Powell’s revised 2025 inflation outlook

December 19, 2024 Coin Telegraph

Macro Expert Names Four Catalysts That Could Trigger ‘Historic’ Stock Market Melt-Up This Year

May 7, 2024 The Daily Hodl

Crypto Analyst Benjamin Cowen Says Fed Pivot and Altcoin Rallies Won’t Happen Until This Occurs

October 29, 2023 The Daily Hodl

‘Magnificent seven’ tech stocks tumble a whopping $280B as crypto surges

October 26, 2023 Coin Telegraph

‘Magnificent seven’ tech stocks tumble a whopping 0B as crypto surges

Andrew Lokenauth

Google's parent company Alphabet was the worst performer on the day, falling 9.5% in a massive $180 billion wipeout.

More than $280 billion has been wiped from the “magnificent seven” tech stocks following the release of several earnings reports on Oct. 25, triggering fears of a looming tech recession.

The so-called “magnificent seven” refers to the top seven blue-chip tech firms including Apple, Microsoft, Meta, Amazon, Alphabet, Nvidia, and Tesla — who combine to make up a quarter of the value of the S&P 500 index.

Google parent company Alphabet saw its share price fall over 9%, wiping $180 billion from its market cap and was noted as Google’s worst-performing day since the COVID-19 pandemic hit in March 2020.

*Google’s (Alphabet Inc Class A) share price over the last five days. Source: Google Finance*

The share prices of Amazon, Nvidia, and Meta fell 5.5%, 4.3%, and 4.2% respectively, according to Y Charts.

Apple and Tesla’s fall in share prices were less severe at 1.35% and 1.9%, while Microsoft was the only one of the seven to buck the trend, with its share price rising 3.1% after reporting better-than-expected growth in its Azure business.

“This is the most widespread tech selloff in months which has resulted in a 5-month low for the S&P 500,” Kobeissi said.

“This is what happens when the few stocks that are holding up the entire market break," the firm said, adding that tech stock investors may be beginning to price-in a recession.

“It seems like buyers are becoming more hesitant as headwinds accumulate,” Kobeissi noted in a follow-up response.

Fears of a “stock market crash” have also been reflected in Google search trends, with the three-word term up 233% over the last week, noted Andrew Lokenauth, a reporter for TheFinanceNewsletter.com.

Google searches for Stock market crash up 233% in past week.

If the stock market crashed 10%, what stocks are you investing in? pic.twitter.com/TQz8tVyL5U
— Andrew Lokenauth | TheFinanceNewsletter.com (@FluentInFinance) October 24, 2023

On the other hand, the cryptocurrency market has been trending upwards amid optimism over possible spot Bitcoin ETF approvals in the United States, with market cap increasing 16.3% to $1.3 trillion over the last week, according to CoinGecko.

Bitcoin (BTC) Ether (ETH), Binance Coin (BNB) and XRP in particular have increased 23.3%, 16.7%, 8% and 15.2% respectively over the last seven days.

However, the crypto market hasn’t proven to be bulletproof in face of tough macroeconomic conditions.

When the United States real gross domestic product decreased over the first two quarters of 2022, the cryptocurrency market cap fell 61.7% from $2.37 trillion to $907 billion, according to CoinGecko.

*Change in the cryptocurrency market cap over the last 60 days. Source: CoinGecko*

While analysts speculate whether Bitcoin will decouple further from tech stocks and the S&P 500, past research from the Multidisciplinary Digital Publishing Institute suggests Bitcoin still tends to trade like a “tech stock” over the long term — due to its extreme volatility.

It can, however, serve as a viable hedge against the U.S. dollar, which it’s negatively correlated to, the research firm deduced from an Oct. 2022 report.

Since Sept. 1, Bitcoin has decoupled from the NASDAQ 100, increasing 34% while the NASDAQ has fallen 8.6% over the same time frame.

Meanwhile, the recent investor movements have some observers hinting that the movement could be seen as a “flight to safety” toward Bitcoin — particularly in light of several banking stocks plummeting lately.

It’s almost like I predicted that #crypto would decouple from stocks. And here we are with tech #stocks sinking and #bitcoin rallying. https://t.co/K1R3OIiOgV
— Bryan Ross (@bryanrosswins) October 25, 2023

Magazine: Joe Lubin — The truth about ETH founders split and ‘Crypto Google’

Here’s What’s in Store for Bitcoin (BTC) and the S&P 500 for Q4 2023, According to Crypto Analyst Jason Pizzino

October 3, 2023 The Daily Hodl

Bitcoin traders put eyes on $31K even as $2B in BTC options expire on Friday

July 28, 2023 Coin Telegraph

Bitcoin traders put eyes on K even as B in BTC options expire on Friday

Coin Telegraph

BTC traders fix their eyes on $31,000 even as $2 billion in Bitcoin options are set to expire this Friday.

The upcoming $2 billion Bitcoin (BTC) monthly options expiry on July 28 could potentially establish $29,500 as a support level. Some argue that the recent U.S. Federal Reserve interest rate increase to 5.25% had a detrimental effect on risk-on assets like cryptocurrencies. However, Bitcoin bulls believe that the full impact of a tighter economic policy takes time to influence the markets.

*Bitcoin daily price movements during option expiries. Source: TradingView*

Looking back, the monthly expiry on June 30 did not cause significant volatility, given that Bitcoin had already experienced a 22.2% gain between June 15 and June 23. Conversely, the May monthly expiry triggered a 9% rally, with Bitcoin's price rising from $26,100 on May 25 to $28,450 on May 29.

In contrast, the options expiry in April resulted in a 7% correction, as Bitcoin's price dropped from $29,900 on April 27 to $27,800 on May 1. This data clearly indicates that the impact of options expiry takes a few days to consolidate but eventually becomes highly relevant for setting trends.

Bulls have regulatory and the ETF momentum on their side

There are multiple spot Bitcoin ETF requests from some of the world's largest fund managers, including BlackRock and Fidelity. In addition, on July 26, a U.S. Lower House Committee approved a pair of bills aiming to clarify the distinctions between securities instruments and digital commodities.

The recent positive corporate earnings also support the bullish momentum in risk-on markets. Along with the latest Consumer Confidence data, they strengthen the argument that the risk of a recession is diminishing, at least in the short term. For starters, Meta Platform reported $32 billion in 2Q revenues, surpassing the market's estimates.

Several other companies have also reported earnings above consensus, including McDonald's, Coca-Cola, Google, Johnson & Johnson, Morgan Stanley and Novartis. As for the U.S. Consumer Confidence, the metric reached its highest level in 2 years, reaching 117 in July, up from 110.1 in June.

Data shows bulls were excessively optimistic on Bitcoin price

The open interest for the options expiry on July 28 is $2 billion. Still, the actual figure is expected to be lower because some bullish traders anticipated price levels of $31,000 or higher. This excessive optimism stemmed from Bitcoin's price trading above the resistance level from July 13 to July 24.

Deribit *Bitcoin options aggregate open interest for July 28. Source: Deribit*

The 0.56 put-to-call ratio reflects the imbalance between the $1.3 billion in call (buy) open interest and the $740 million in put (sell) options. Yet, if Bitcoin’s price remains near $29,500 at 8:00 am UTC on July 28, only $137 million worth of these call (buy) options will be available. This difference happens because the right to buy Bitcoin at $30,000 or $31,000 is useless if BTC trades below that level on expiry.

Bitcoin bears aim for sub-$29,000 to secure some profit

Below are the four most likely scenarios based on the current price action. The number of options contracts available on July 28 for call (buy) and put (sell) instruments varies depending on the expiry price. The imbalance favoring each side constitutes the theoretical profit.

This crude estimate disregards more complex investment strategies. For instance, a trader could have sold a put option, effectively gaining positive exposure to Bitcoin above a specific price. Unfortunately, there’s no easy way to estimate this effect.

Between $27,000 and $28,000: 1,100 calls vs. 10,000 puts. The net result favors the put instruments by $240 million.
Between $28,000 and $29,000: 3,000 calls vs. 6,800 puts. The net result favors the put instruments by $110 million.
Between $29,000 and $31,000: 6,500 calls vs. 6,600 puts. The result is balanced between put and call options.
Between $31,000 and $32,000: 15,400 calls vs. 3,800 puts. The net result favors the call instruments by $360 million.

Note that the bulls' best shot requires a 5.5% price increase ahead of the July 28 expiry to secure a profit. On the other hand, bears only need a modest 2% correction below $29,000 to come out ahead on the monthly expiry. However, the potential profit of $110 million doesn't justify a large effort for the bears. Moreover, given that Bitcoin has recently failed to break the $29,000 support level, the most probable outcome for the expiry is a neutral area near $30,000.

When analyzing a broader mid-to-long term scenario, Bitcoin bears may have the upper hand due to the added incentives of higher fixed-income returns resulting from the reduced 3% inflation and increased interest rates. But, considering the overall bullish momentum in the economy, there's actually a favorable outlook for Bitcoin to break above $31,000 in the following weeks.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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

April 15, 2023 Coin Telegraph

Analysis

Will $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 more than ten 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 dollar strength index (DYX), which measures the U.S. 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 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 1.0% 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 the 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 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 price can easily rally another 10% to $33,000 given sellers are currently scared 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.

After Nailing 2022 Collapse, Billionaire Chamath Palihapitiya Warns Stock Market in Midst of Worst Earnings Gap in 30 Years

March 6, 2023 The Daily Hodl

Bitcoin pro traders warm up the $24K level, suggesting that the current BTC rally has legs

February 2, 2023 Coin Telegraph

Bitcoin pro traders warm up the K level, suggesting that the current BTC rally has legs

Ban

The Fed’s interest hike matched the market consensus and weak employment data boosted investors’ appetite for risk assets, but BTC traders should still exercise caution.

On Feb. 1 and Feb 2. Bitcoin’s (BTC) price surpassed even the most bullish price projections after the U.S. Federal Reserve (FED) announced plans to raise interest rates by 25 basis points.

Even though FED chair Jerome Powell told investors not to wait for interest rate cuts in 2023, during his press conference he did clearly state that the employment data is currently the main focus.

The results of the ADP payroll survey revealed on Feb. 1 that U.S. private sector hiring was significantly slower in January. ADP's measure of private sector payrolls was 106,000, well below the 160,000 market consensus. This data fueled investors’ expectations of future interest rate hikes by the FED going forward.

After testing the $22,500 support on Feb. 1, Bitcoin gained 6.5% in five hours and has since been flirting with the $24,000 level. While the recent gains are exciting, traders should note that the improvement in crypto market sentiment tracked the risk-on attitude seen in traditional markets.

Stocks with negative operating margin presented significant gains on Feb. 2, including Coinbase (COIN) 20%, Cloudflare (NET) 15%, Unity Software (U) 12% and DoorDash (DASH) 10%. That factor alone should be a warning sign that the gains of the last few weeks might not be sustainable. It’s also important to remember that Bitcoin’s 40-day correlation to the S&P 500 remains above 75%.

Potential regulatory headwinds could also have played a vital role in supporting Bitcoin's upside. Huang Yiping, a former member of the Monetary Policy Committee at the People’s Bank of China (PBoC), recently argued that a permanent ban on crypto could result in many missed opportunities.

Huang, now an economics professor at Peking University’s National School of Development, criticized Bitcoin for lacking intrinsic value, but noted that crypto-related technologies are “very valuable” to regulated financial systems.

Let's look at derivatives metrics to understand whether professional traders added leverage positions after Bitcoin’s recent price breakout.

Bitcoin margin traders warm up to the $22,500 support

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

For example, one can increase exposure by borrowing stablecoins to buy Bitcoin. On the other hand, Bitcoin borrowers can only short the cryptocurrency as they bet on its price declining. Unlike futures contracts, the balance between margin longs and shorts isn't always matched.

The above chart shows that OKX traders' margin lending ratio drastically increased on Jan. 30, signaling that professional traders added leverage long after Bitcoin successfully bounced after testing the $22,500 support.

More importantly, Jan. 29 marked the indicator’s lowest level in more than eleven weeks at 13 favoring stablecoin borrowing by a wide margin — it indicates that shorts are not confident about building bearish leveraged positions. Currently at 24, it is clearly evident that bulls are becoming more comfortable with the current $22,500 support.

Options traders flirt with an optimistic bias

Traders should also analyze options markets to understand whether the recent rally has caused investors to become more risk-averse. The 25% delta skew is a telling sign whenever arbitrage desks and market makers are overcharging for upside or downside protection.

The indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put options premium is higher than risk call options.

In short, the skew metric will move above 10% if traders fear a Bitcoin price crash. On the other hand, generalized excitement reflects a negative 10% skew.

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

The 25% delta skew has been relatively calm near negative 5, indicating similar odds for downside and upside from option traders. On the bright side, not even the $22,500 retest on Jan. 31 was enough to break the bulls’ spirit. Combined with the lack of demand from margin traders willing to short Bitcoin, the derivatives markets paint a bullish picture.

Even if it takes a little longer (perhaps a couple of days) to break above $24,000, there are no signs of stress coming from the Bitcoin margin and options markets. However, traditional markets continue to play a vital role in setting the trend, so Bitcoin investors should not become overconfident.

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 fails to break the $21K support, but bears remain shy

October 31, 2022 Coin Telegraph

Bitcoin fails to break the K support, but bears remain shy

Coin Telegraph

BTC futures and stablecoin margin data shows a lack of appetite from buyers even as Bitcoin gained 7.5% in a week.

Bitcoin (BTC) rallied on the back of the United States stock market’s 3.4% gains on Oct. 28, with the S&P 500 index rising to its highest level in 44 days. In addition, recently released data showed that inflation might be slowing down, which gave investors hope that the Federal Reserve might break its pattern of 75 basis-point rate hikes after its November meeting.

In September, the U.S. core personal consumption expenditures price index rose 0.5% from the previous month. Although still an increase, it was in line with expectations. This data is the Federal Reserve’s primary inflation measure for interest rate modeling.

Additional positive news came from tech giant Apple, which reported weak iPhone revenues on Oct. 27 but beat Wall Street estimates for quarterly earnings and margin. Moreover, Apple chief financial officer Luca Maestri said services would grow year-over-year in the fourth quarter.

Bitcoin futures data shows reluctant buyers

Retail traders usually avoid quarterly futures due to their price difference from spot markets. Still, they are professional traders’ preferred instruments because they prevent the perpetual fluctuation of contracts’ funding rates.

These fixed-month contracts usually trade at a slight premium to spot markets because investors demand more money to withhold the settlement. But this situation is not exclusive to crypto markets, so futures should trade at a 4%–10% annualized premium in healthy markets.

*Bitcoin 3-month futures premium. Source: Laevitas*

Bitcoin’s futures premium has stood below 2% for the past 30 days, signaling a complete lack of interest from leverage buyers. Furthermore, there was no significant improvement on Oct. 29 as BTC rallied toward the $21,000 resistance.

In a nutshell, derivatives traders are far from optimistic about Bitcoin’s price despite the low cost of adding bullish positions. Still, one must also analyze the BTC margin markets to exclude externalities specific to the futures instrument.

Derivative traders are unwilling to place bullish bets

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 short it — betting on the price decrease.

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*

The chart above shows that investors’ morale topped on Oct. 13 as the ratio reached 23.5, which is seldom sustainable for longer-term periods. From that point onward, OKX traders presented less demand for borrowing Tether, exclusively used to bet on the price uptrend.

Still, the ratio currently stands at 7.5, leaning bullish in absolute terms, as it favors stablecoin borrowing by a wide margin. It is worth highlighting that no sentiment change happened despite Bitcoin’s 7.5% weekly rally between Oct. 24 and Oct. 31.

A lack of excitement does not mean bearishness

Derivatives data shows no demand from buyers even as Bitcoin flirted with $21,000 on Oct. 29. Unlike retail traders, these experienced whales tend to anticipate movements by holding on to their conviction even when markets move the opposite way.

The above data suggests that traders expecting Bitcoin to break above $21,000 in the short term will likely be disappointed. However, on a positive note, there has been no sign of bears getting more confident, as both futures and margin markets remain neutral to bullish.

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.

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