Key Takeaways
What clues has Bitcoin price action given after Friday’s wipeout?
The weekend, and especially Monday, showed that there was some willingness among buyers to absorb the dip, but this was not enough to bring about a recovery. The sentiment remained anxious.
Were market participants hedging against the next crypto crash?
The Put/Call ratio on OKEX reflected increased call buying and near-term bullish sentiment; However, other figures indicated reduced speculative interest. Long-term investors continued to make comfortable profits.
In the 12 hours before the time of writing, Bitcoin [BTC] fell 4.51% from $115.8k to $110.6k.
Market participants, buoyed by the price move towards the $116k-$117k resistance zone on October 12 and 13, were fearful again.
The Crypto Fear and Greed Index fell as low as 24 on October 12, reflecting deeply fearful sentiment.
CoinGlass data showed that the coverage ratio fell to negative values on October 11, but has risen above zero again.
Still, positive funding alone does not indicate bullish sentiment. The Open Interest (OI) trends on Coinalyze reflected the heavy liquidations on October 10 and hopes for a quick recovery that seeped into the market in recent days.
Additionally, ETF flows were negative on Monday, again showing a short-term bearish trend.
On Monday, October 12, a BTC rejection occurred in the local supply zone, leading to an OI drop of 2.37% in the past 24 hours.
This showed that speculative interest remained cool and traders did not rush to bid BTC on margin, which could be a wise move to hedge against potential volatility.
Should you hedge against another crypto crash?
The answer is simple for HODLers. Doing nothing is a great option when navigating the markets. Long-term Bitcoin investors do not have to fear another crypto crash as their conviction and time horizon are generally very high.
Bitcoin NUPL remained above 0.5 despite the recent correction, still indicating that holders were making profits on average.
It is indicative of the bull market’s mid-phase conviction and differed from the fear phase the benchmark showed for BTC in March and April.
Traders and holders of short-term bonds, those who manage their portfolios more actively, may want to hedge against further price declines. The $100,000-$102,000 support zone is a vital area on the price charts technically and psychologically.
The BTC Put/Call ratio stood at 1.05 on October 11, demonstrating some hedging in the options market with increased purchases of put options. It reflected the increased demand for hedging on that day, but the ratio has since fallen to 0.9.
This implied that options trading volume turned bullish with more call purchases, causing the ratio to decline.
The estimated leverage ratio has fallen sharply in recent days due to a sudden drop in OI on the stock markets. This wave of deleveraging, which is mainly caused by forced liquidations, indicates a reduced risk appetite on the futures market.
Overall, the indicators point to caution. Instead of rushing, traders and investors may choose to wait for clearer signs of recovery.
A Bitcoin move above $117,000 could restore confidence and signal the potential for further gains.