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Thursday, October 21, 2021

Investors Waiting for Bitcoin Rally, While Tesla Dumps BTC Payments!

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Even though the price of bitcoin has dropped in the last week, the cryptocurrency market is still surging to new levels as investors pour money into altcoins or bitcoin alternatives reaping huge profits.

On May 9, the total altcoin market capitalization increased by 24% in nine days to $1.35 trillion, an all-time high. Bitcoin traders are disappointed with altcoins and meme coins pumping to new regular peaks, despite Bitcoin’s 62% cumulative rise in 2021.

On May 10, Fidelity Investments, a $3.8 trillion global asset manager, filed a request with the US Securities and Exchange Commission for a Bitcoin exchange-traded fund (ETF). The Chicago Board Options Exchange (CBOE) and Fidelity’s Wise Origin Bitcoin (BTC) partnered, and the SEC’s first response window will close in 44 days. 

Palantir (PLTR), a $30 billion data analytics firm founded by billionaire Peter Thiel, revealed on May 11 that it had begun accepting Bitcoin payments. The company is expected to add BTC to its balance sheet, following in the footsteps of Tesla (TSLA) and MicroStrategy (MSTR), and it will have more than $2 billion in cash on hand for acquisitions.

However, with all this positive news, BTC’s price action has not taken it’s bullish turn.

Also Following Elon Musk’s tweet that Tesla Inc had stopped accepting bitcoin for vehicle purchases due to climate issues, bitcoin rebounded to about $50,000 on thursday.

Bitcoin is currently trading at $51,038.11, with 10.71% decline in the last 24 hours.

A look at the option skew indicator:

Investors should look at the options markets to better understand how professional traders are positioning themselves. On contract expiration, call options allow the buyer to purchase Bitcoin at a fixed price. Put options, on the other hand, shield customers from price declines by providing protection. 

When market makers and professional traders are bullish, they can demand a higher premium on call (buy) calls, causing the delta skew indicator to be negative by 25%.

Since April 15, a skew indicator between -10 and +10 has been considered neutral. This data shows that whales and market makers have a balanced risk assessment of downside and upside risk. 

There is no indication that option traders are bullish, given today’s price decline. This information corresponds to the BTC permanent futures markets.

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