Market Wrap: Bitcoin Flat at $19K While Ether Options Traders Bet Bearish on 2021

Low volumes are keeping the bitcoin market in the $19,000 neighborhood; option traders expect a high ether price in December but aren’t so convinced about next year.

  • Bitcoin (BTC) trading around $19,110 as of 21:10 UTC (4:10 p.m. ET). Gaining 0.60% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $18,360-$19,357
  • BTC near its 10-day and 50-day moving averages, a sideways signal for market technicians.

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Bitcoin trading on Bitstamp since Nov. 29.
The bitcoin market is taking a bit of a breather Wednesday, with flat price action producing a tighter price range between $18,360 and $19,357 over the past 24 hours. The world’s oldest cryptocurrency is currently at $19,110 as of press time, according to CoinDesk 20 data.

The sideways price performance can be partially attributed to lighter volume Wednesday.  This was in contrast to earlier in the week, when the exchanges monitored by the CoinDesk 20 experienced two days of over $2 billion in volume. As of press time, daily volume was at $1.1 billion.

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Volumes on CoinDesk 20 exchanges the past six months.
“Consolidation continues, judging by the signals from the RSI indicators and Bollinger Bands,” noted Constantin Kogan, partner at crypto-focused investment firm Wave Financial.

The relative strength index, or RSI, is a technical market momentum indicator and Bollinger Bands use standard deviations of moving averages to forecast an asset’s performance. Using these, Kogan anticipates another price push upward. “Potentially, another attempt will be made to break above $20,000,” he added.

“Bitcoin is holding the $18,200-$19,700 range, making its new all-time high yesterday, bringing more volatility and making bitcoin more trending than ever before this year,” noted Elie Le Rest, partner at quant trading firm ExoAlpha. The all-time high price record, set Tuesday, is now at $19,920.53 according to CoinDesk 20 data.

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Bitcoin price over the past week.
“This market environment reminds us of 2017, but this time it’s different as it was not driven only by retail investors rushing into a new gold mine,” added ExoAlpha’s Le Rest.

In the options market, Wednesday is shaping up to be a day heavily favoring puts (66%) versus calls (33%) on bitcoin. This suggests options traders are putting in some protection on possible downsides in price. A put is a bearish bet on the price while a call is a bullish wager.

“Drops happened multiple times during the 2017 rally and we expect them to happen several times again this bull run as part of the natural market cycle,” said Andrew Tu, a representative from quant trading firm Efficient Frontier.

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BTC option flows for Wednesday.
Traders are likely cashing in their winnings Wednesday after a strong November.

“The market did not accelerate when hitting the all-time highs twice, so there is clearly a barrage of profit-taking at this critical and significant level,” said Jean-Marc Bonnefous, managing partner of investment firm Tellurian Capital.

Tight range days like Wednesday may just be part of the bitcoin market in December, Bonnefous added. “I suspect consolidation in a range is in order for now until fresh buying comes in.”

Bear mode for ether’s price in 2021?

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Wednesday, trading around $596 and climbing 0.30% in 24 hours as of 21:10 UTC (4:10 p.m. ET).

Ether options traders see a 91% chance of ether over $400 for December 2020 expiration. However, into 2021 those price probabilities drop quite a bit, with traders seeing a 91% chance of ether only over $280 by March 2021 expiration, according to date from aggregator Skew.

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Ether price probabilities based on the options market for December 2020 (green) and March 2021 (blue).
“Out to the end of December, there’s a more fair distribution of topside and downside interest,” noted Vishal Shah, an options trader and founder of derivatives exchange Alpha5. “It could be that the downside is protection-seeking. That picture changes beyond end of year, where from January onward there is a clear favor of high strikes but there’s also a lot of open interest in the low strikes.”

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