Journalist
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Key Takeaways
Will the recovery continue until December?
It depends on how the macro front develops, especially in the run-up to the Fed’s interest rate decision.
How is the market positioned?
The flow of options suggested bullish positioning towards $90,000-$100,000, but increased put skew indicated underlying caution.
After heavy losses in November, Bitcoin bulls are closely watching for signs of seller exhaustion and perhaps a possible Santa rally in December.
Earlier this month, renowned Polish analyst Robert Ruszale was one of the ‘Santa rally’ bulls.
He expected a recovery in the 50-Weekly Exponential Moving Average (EMA), a situation he said would last into December.
However, the bull market support was broken and the correction bottomed at $80,000 last week. Ruszale apologized for his failed projection.
However, at the time of writing, BTC was trading above $85,000 again, ahead of the Fed’s interest rate decision.
Source: BTC/USDT, TradingView
Will the recovery continue until December?
On the options market, Deribit Insights noted that a key fund or miner that was active during the correction period has gone ‘silent’.
These mega players have been actively selling call options and buying puts (bearish positioning) in recent weeks to “protect their assets under management.”
By standing still, they expected some relief and therefore did not have to actively protect themselves against further setbacks. However, Deribit warned that there was still near-term caution on overall heavy put buying.
“Put Skew is consequently increased by Put purchases and (at best) pressure on Calls, often financing the downside.”
Source: Deribit
That said, the best options volumes in the last 24 hours, bulls (green) were looking at $100k and $90k, with coverage (hedging, red bars) at $84k and $70k.
Source: Arkham
However, for Amberdata, BTC’s sluggish performance was due to the weakness of US technology. Greg Magadini of Amberdata added,
“Note that US tech weakness, however, could be the result of a global credit crunch (Japan raising interest rates). Therefore: Credit → US Tech AI → Crypto.”
According to Magadini, the technical weakness may have been caused by concerns about the technology The rising Japanese government bond returns and the potential for a new carry trade scenario.
He downplayed such an outcome, however,
“Short-term rates matter most to carry traders, and the JPY overnight rate is fixed, while the FOMC USD Fed Funds rate cut on December 10 is only a probability of happening.”
He added:
“Japan’s debt levels are so high that they are unlikely to raise short-term interest rates.”
If so, the macro front could perhaps turn positive for risky assets and fuel BTC’s recovery towards $90,000 or $100,000.