P95G Bitcoin Market Weekly Report — Week of 07/13/2020
The Bitcoin continued to trade in range-bound for the third week in a row. The BTC price dropped below the $9,000 support at one point, but it managed to rebound and reach $9,468 afterward. The price has since stabilized and is moving sideway again, at around $9,300.
The current support level remains at $9,000, while the resistance is at $9,500. There is no clear direction at the moment. If the volatility picks up, wait for the BTC price to break the support or resistance before determining the trade direction.
Review of the week:
Since 1 July, Bitcoin‘s price hasn’t gained or lost by much, with the cryptocurrency continuing to trade within a tight price band. While the Realized Volatility dipped to 3.2% on 10 July, the implied volatility remained firm at 3.5%. It can be observed that the IV had been moving sideways over a couple of weeks, with traders not expecting an immediate trend reversal in the Bitcoin market. According to one of the Managing Partners at Blockhead Capital, Matt David Kaye, the reason for this suppressed volatility may be the flood of yield-seeking funds with short volatility options in the market. These have been advertised as low-risk, yield generating vehicles to many investors in the market. As the price of Bitcoin consolidated, market makers were trying to hedge their risk by ever-adjusting their spot exposure. This resulted in the creation of a tighter spread and by extension, predictable price ranges for June as they bought back BTC at low prices and sold BTC when the price rose even a little. Thus, these short-volatility funds were gaining pennies, with Kaye adding that the risk was mispriced in the Bitcoin Options market. However, this also gives an excellent opportunity to accumulate volatility, as when the market breaks out, it could result in larger profits. The only way now for the price to pick up is to have the spot market volume note a boost too.
Disclaimer: The above market commentary is based on technical analysis using historical pricing data, and is for reference only. It does not serve as investment or trading advice.
