Academy Trading Ideas Article

Crypto Traders Face Market Uncertainty as Bitcoin’s Halving Arrives: Crypto Market Daily

2020.05.11

The price of Bitcoin (BTC) plunged yesterday at 8:00 Hong Kong time (UTC+8). The market-leading cryptocurrency dropped as much as 15 percent in an hour to a recent low of $8,107 before a quick bounce. Bitcoin now is trading around $8,800 with its third block reward halving scheduled for today, per OKEx’s BTC Index Price

OKEx Token Index Board (as of 11:30 UTC). Source: OKEx

Sell the news?

The rapid rise since mid-March has pushed the Bitcoin price back into the $10,000 range — but it has also benefited a large number of market participants in the short term. 

“Buy the rumor, sell the news” is a phenomenon that happens in most markets. It implies that, after accumulating a good amount of profits from the hype leading up to an event, traders sell immediately before the event. 

Looking at the OKEx trading data, the BTC Long/Short ratio fell significantly from 1.29 to as low as 0.90 today. Open Interest (OI) dropped by about 8 percent and the Quarterly Futures premium over spot price turned from positive to negative in the last 24 hours — indicating the overall market right now is dominated by the bears. 

BTC Long/Short Ratio. Source: OKEx Trading Data

BTC ATM Implied Volatility jumped higher after the plunge, according to data from skew. One-month ATM Vol jump from 78 percent average to its current 93 percent. The market seems to be predicting more volatility after the halving.

BTC ATM Implied Volatility. Source: skew

Market confidence has not been destroyed

Though the sudden drop in price has made the Bitcoin Halving day not particularly festive — at least, as of the time of writing — market confidence has not been destroyed. 

The Crypto Fear & Greed Index rallied during the weekend — rising from a mid-week 40 to a recent high of 56 on May 8, before dropping back to 40 today. This could still be interpreted as a return of market confidence, since it was below 30 for almost 40 days before April 29.

Market participants are hovering in a neutral zone between fear and greed, shaking off a long-term bearish trend of being in extreme fear (below 20 indicates extreme fear; above 60 indicates extreme greed).

Crypto Fear & Greed Index. Source: alternative.me

Bitcoin Technical Analysis

OKEx BTC Quarterly Futures (BTCUSD20200626) is back to a negative premium over spot. 

An intra-day support level sits at $8,400 since the market volatility has increased and the $8,550 support has been weakened. The intraday resistance area to focus on is around $8,850. If the $8,400 level cannot hold, a retest of the 200-day moving average — currently sitting at $8,050 — could be an option.

OKEx BTC Quarterly Futures (BTCUSD0626) 1H chart. Source: OKEx

Disclaimer: This material should not be taken as the basis for making investment decisions, nor be construed as a recommendation to engage in investment transactions. Trading digital assets involve significant risk and can result in the loss of your invested capital. You should ensure that you fully understand the risk involved and take into consideration your level of experience, investment objectives and seek independent financial advice if necessary


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