These Two Bitcoin Indicators Offer Light in a Gloomy Marke

Still, market participants can find encouragement in at least two indicators, the first of which is connected to bitcoin options listed on the leading exchange Deribit.

Long-term options skew remains bullish

Regardless of the market’s downturn, the 180-day difference between calls and puts on bitcoin persists at a level above 3, which suggests a longer-term expectation of price growth over the next six months, according to data monitored by Amberdata.

As a seasoned investor with over two decades of experience in the stock market, I’ve come to appreciate the value and complexity of options trading. A call option, in my perspective, is like a golden ticket that grants you the opportunity (but not the necessity) to purchase a valuable asset at a predetermined price at some future date. It embodies a bullish outlook on the market, a bet that the asset’s value will rise. Conversely, a put option represents a bearish position, a wager that the asset’s value will decline.

In simpler terms, some experts believe that after the short-term turbulence caused by global market fluctuations settles down, Bitcoin’s long-term value will recover and continue to rise.

The economic slowdown in the U.S. is becoming apparent, and the Federal Reserve may need to reduce interest rates more than anticipated due to falling behind on this adjustment. This situation is causing U.S. Treasury bond yields and the dollar value to decrease, which significantly boosts the potential for bitcoin. Additionally, China is increasing its economic stimulus and cash injections, along with a weaker U.S. dollar, leading to an escalation of global liquidity conditions. The founders of LondonCryptoClub stated this in their latest newsletter on Monday.

“Given the situation where the Federal Reserve might lower interest rates and increase money supply, Bitcoin appears to be the most likely investment. Prepare for some market turbulence ahead, but keep your focus on the long-term perspective.” (Founders’ note)

CVD suggests dip-buying. on U.S. exchanges

In summary, the fast drop in value is marked by investors purchasing at dips on American trading platforms like Coinbase, Gemini, and Kraken, as indicated by the data from cumulative volume delta (CVD), which is monitored by Kaiko based in Paris.

In simpler terms, the CVD represents the overall gap between the number of transactions made at the asking price (to buy) and the number of transactions made at the bidding price (to sell), during a particular timeframe. If this difference increases (becoming positive), it means more trades are happening for buying than selling. Conversely, if the CVD decreases (becoming negative), it suggests more trades are being made for selling than buying.

As an analyst, I’ve observed that the Cryptocurrency Volume Differential (CVD) on platforms like Coinbase, Gemini, and Kraken has predominantly remained bullish since August 1st. This suggests a consistent trend of net buying activity or bargain hunting during price declines, which is often a positive sign in cryptocurrency markets.

As a crypto investor, I’ve noticed an intriguing pattern over the past few days. While offshore exchanges like Binance and OKX have experienced significant selling since Friday, the cumulative volume delta (CVD) on most US-based platforms has remained positive. This indicates that some traders in the U.S. might have been buying the dip, according to Kaiko’s recent note published on Monday.