Bitcoin has fallen into the “last support zone”, with bulls having to defend $ 30,000 to avoid a sell-off
Bitcoin fell into the “final support zone” above $ 31,000 on July 15 as the downward move led to new predictions of a BTC price collapse.
Data from TradingView shows that BTC / USD hit a new local low of $ 31.175 on Thursday. One reason for the deeper drop in prices was that Consob, the Italian market regulator, issued a stern warning to the Binance Group that its companies in this country are not authorized to offer investment services and activities.
After a series of actions against Binance, a stock exchange spokesman did speak to the mainstream press that operations were not affected.
“We take a cooperative approach to dealing with supervisory authorities and take our compliance obligations very seriously.”
Therefore, there is still little reason for optimism among the spot dealers. For popular trader Michaël van de Poppe, $ 31,000 is Bitcoin’s last hope of avoiding a deeper decline.
“Bitcoin was unable to hold USD 32.4k as support and fell lower, below which it has to hold a final support zone (USD 31-31.5k zone).
“If that area is lost, the next areas are $ 29,000 and $ 24,000.”
Source: Michaël van de Poppe / Twitter
The price pain gets worse when trading volume is low, making it difficult to maintain upward momentum.
However, as data from Glassnode shows, it can be a seasonal rather than an emotional phenomenon.
Co-founders Yann Allemann and Jan Happel argue that “investors don’t sell, they’re just on vacation” and point to a significant reduction in transaction fees.
Source: Yann & Jan / Twitter
Bitcoin bulls have to defend $ 30,000
Gone are the days of simply trading Bitcoin by scanning technical charts and spot market order books.
The Bitcoin market has matured since the March 2020 crash and participants can no longer ignore macroeconomic developments and activities in the futures and options markets.
This particularly happened on Thursday when risky sentiment on Wall Street put Bitcoin under downward pressure, pushing the cryptocurrency towards the $ 30,000 support level, a loss of which could create pressure.
Since Bitcoin has been locked in a wide range of $ 30,000 to $ 40,000 since mid-May, many options traders have sold put orders with a strike of $ 30,000 and calls with a strike of $ 40,000. These transactions have been posted on Deribit and other crypto derivatives exchanges in the hopes that consolidation will continue, resulting in implied volatility as well as the value of calls and puts
A put option gives the buyer the right, but not the obligation, to sell the underlying asset at a specified price on or before a specified date. The call option entitles you to buy. Simply put, selling a put is like insuring a put buyer against a sell-off below a certain level – in this case, $ 30,000.
“After the sell-off in mid-May, volatility peaked, but spot prices have been trading within an underlying range since then. These types of consolidation periods are the perfect environment for trades with lower volatility. The main idea is that the price swings between support and resistance, and traders sell options in the expectation that those levels will hold. ” said Greg Magadini, CEO and Co-Founder of Genesis Volability.
But Bitcoin is moving towards the lower end of the $ 30,000 range. If this level is broken, traders who have sold puts at this level can take advantage of downside protection by shorting Bitcoin futures or selling Bitcoin on the spot market. This could increase the downward pressure around the cryptocurrency and lead to a deeper drop in prices.
“Whenever support or resistance levels are breached, traders need to hedge quickly as prices rise rapidly to new levels. Hedging activity by different traders on the same side of a volatile trade also creates a self-reinforcing event. “