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Technical Analysis of BTC/USD for August 25, 2020

Crypto Industry News:

Open interest in Bitcoin option contracts returned to $ 2 billion after briefly breaching the level before expiring in July. Since the beginning of 2020, the BTC options market has grown sixfold, prompting investors to wonder if its potential impact on price has become too extreme.

Slightly more than a third of these contracts expire on August 28, which corresponds to 57,000 BTC. For this reason, traders have every reason to be concerned about the potential impact of an expiry on the markets, especially given the timeframe for these settlements.

The Chicago Mercantile Exchange (CME) expires at 8:00 UTC and Deribit and OKEx is at 15:00 UTC. Some exchanges list weekly contracts, but monthly contracts usually cover most of the volume.

Deribit currently holds 80% of the Bitcoin options market share. Therefore, it will be analyzed in detail below. Namely, there is open interest in the 9.9k BTC options in Deribit, which are expected to expire below 25% delta next Friday, which means that the market is currently pricing them at no less than 25% of the rates. As widely discussed, these out-of-the-money options account for more than 40% of the open call options in August.

After a 27% increase in the last 30 days, most put options have become worthless. In this situation, 17.5 thousand BTC put options are open, which entails 85% expiry in August. After adding the call (buy) and put (sell) options in Deribit, there are 46.6 thousand BTC with the August expiry. Almost 60% of them are considered unprofitable. This drastically reduces potential pressure from such a market.

It should be noted that both futures and options markets expire simultaneously, hence it is difficult to identify the responsibility of any derivative for intense price fluctuations.

Technical Market Outlook:

The BTC/USD pair has bounced from the level of $11,756 which is a 38% Fibonacci retracement level of the last wave down. The Doji candlestick pattern made at the top of this move might indicate a rejection and reversal of the higher prices. Despite the fact, that the BTC is clearly trying to bounce higher, the market is still trading below the supply zone located between the levels of $12,269 - $12,431. The nearest technical resistance is seen at the level of $11,461 (for intraday traders) and the level of $11,358 will act as a support from now. The key short-term technical support is seen at the level of $11,062.

Weekly Pivot Points:

WR3 - $13,245

WR2 - $12,828

WR1 - $12,122

Weekly Pivot - $11,728

WS1 - $11,022

WS2 - $10,628

WS3 - $9,978

Trading Recommendations:

The weekly trend on the BTC/USD pair remains up and there are no signs of trend reversal, so buy orders are preferred in the mid-term. All the dynamic correction are still being used to buy the dips. The next mid-term target for bulls is seen at the level of $13,712. The key mid-term technical support is seen at the level of $10,463.


The material has been provided by InstaForex Company -