Cointelegraph By Marcel Pechman
Historical data shows that it is nearly impossible to consistently predict Bitcoin’s price action and many traders that attempt this end up losing money. Now that Bitcoin trades near $50,000, the ultimate goal for most traders is to hold on to their current holdings and incrementally add to them in a way that is not terribly risky.
Options strategies provide excellent opportunities for traders who have a fixed-range target for an asset. For example, using leveraged futures contracts might be a solution for a scenario where one expects a price increase of up to 28% over the next month. Of course, using a tight stop loss lessens the viability of the trade.
On the other hand, using multiple call (buy) options can create a strategy that allows gains that are four times higher than the potential loss. These can be used in both bullish and bearish circumstances, depending on the investors’ expectations.
The long butterfly strategy allows a trader to profit from the upside while limiting losses. It’s important to remember that options have a set expiry date; therefore, the price increase must happen during the defined period.
The Bitcoin (BTC) calendar options below are for the March 26 expiry, but this strategy can also be used on Ether (ETH) options or a different time frame. Although the costs will vary, its general efficiency should not be affected.
The suggested bullish strategy consists of buying 1 BTC worth $48,000 call options while simultaneously selling double that amount of $56,000 calls. To finalize the trade, one should buy 1 BTC worth of $64,000 call options.
While this call option gives the buyer the right to acquire an asset, the contract seller gets a (potential) negative exposure.
As the estimate above shows, if BTC is trading for $48,700, any outcome between $49,380 (up 1.5%) and $62,630 (up 28.6%) yields a net gain. For example, a 10% price increase to $53,570 results in a $4,000 net gain. Meanwhile, this strategy’s maximum loss is $1,350 if BTC trades below $48,000 or above $64,000 on March 26.
This allure of this butterfly strategy is the trader can secure a $4,050 gain, which is 3x larger than the maximum loss, if BTC trades from $53,550 to $58,460 expiry.
Overall it yields a much better risk-reward from leveraged futures trading considering the limited downside.
The multiple options strategy trade provides a better risk-reward for bullish traders seeking exposure to BTC’s price increase and the only upfront fee required is the $1,350 which reflects the maximum loss if the price is below $48,000 or above $64,000 at the expiry date.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.
YouTuber claims he’ll buy 111 Tesla Model 3s… if Elon Musk accepts Bitcoin Cash
Cointelegraph By Joshua Mapperson
A Bitcoin Cash (BCH) YouTuber has promised to buy 111 Tesla Model 3s … but only if Tesla CEO Elon Musk agrees to accept BCH for Tesla purchases from now on.
Going by the title “1stmil.com,” the Australian YouTuber explained to almost 8,000 followers over three short videos that he believes Tesla would see a boost in sales as a result as there are many Bitcoin Cash supporters who want to spend their cryptocurrency, whereas Bitcoin (BTC) supporters tend to want to hang on to their holdings.
“You will enjoy unbelievable amount of support by people who actually want to spend the Bitcoin Cash, not the people who just want to HODL the BTC.”
In late March the Bitcoin Cash community was dismayed to learn that BCH had not been added as a payment option when Elon Musk confirmed that U.S. customers could buy a Tesla using BTC.
The day following this public rebuff, BCH hit new all-time lows against Bitcoin of 0.089 BTC.
It’s unclear whether this latest BCH offer is just a publicity stunt by the YouTuber who has hosted his channel for three years now. 1stmil’s ability to pay for 111 Telsas is also an open question as the wallet shown in the first video, only holds approximately $141,000 in BCH, or enough to buy just three Teslas. On Reddit, he clarified that he purposefully did not want to reveal his other wallets for security reasons.
Hahah!! Oh man, I am laughing out loud at the genius of this man:https://t.co/0ZaEWqwZp2
— Colin Talks Crypto (@COLINTCRYPTO) April 21, 2021
In earlier videos he alludes to already owning multiple millions in the crypto, predicting he will make $1 billion when BCH reaches $50,000 by 2025. If true that would mean he holds at least $14.88 million in BCH at current prices.
The cars he plans to purchase, white Tesla Model 3s are currently sold in Australia for approximately $52,000. Not including the volume discount, this would equate to an initial purchase of $5.8 million.
He said he intends to use the Tesla EVs for a new business project, the details of which he cannot reveal yet. However, on Reddit, he explained that the cars will be stripped out and repurposed: “Let’s just say Tesla model 3s are sold in Australia below cost. Their parts are worth more than their sum.”
This isn’t the first time BCH proponents have brought the crypto to Elon Musk’s attention. On March 25, in response to Musk tweeting that “You can now buy a Tesla with Bitcoin,” Kim Dotcom compared BCH and BTC fees saying the former “is serving the mass market, not just the 1%.”
— Elon Musk (@elonmusk) March 25, 2021
This metric that called the 2017 top is now flashing red
Cointelegraph By Chris Voehr
After weeks of Bitcoin (BTC) sell-offs, high-net worth Bitcoin holders, or whales, are finally back to buying.
Their buying activity not only picked up when BTC’s price broke out of the two-months ascending triangle to new all-time highs, but it has also stayed intact since the price crash on April 18.
Whales have come back to accumulate Bitcoin
Whales’ continuous buying activity comes at a time when the number of addresses holding more than 1,000 Bitcoin has reached its four-month support line.
This is probably not a coincidence, as the turnaround takes place at a time when profit-taking in the market is close to its support line too.
Current profit-taking behavior has followed a seven-month trend
The level at which profit-taking takes place can be derived from the adjusted spent output profit ratio (aSOPR), which measures the ratio between the price sold and the price paid for a coin while disregarding temporary coin movements (movements within less than one hour).
In other words, aSOPR measures how much profit holders were sitting on (in U.S. dollars) at the time they sold their coins.
Since September 2020, profit-taking has continuously found positive support at higher levels. This suggests that whenever sell-offs have happened in the past seven months, sellers have been comfortable not selling at a higher profit level each time, compared with the previous sell-offs. However, this trend might eventually come to an end.
Profit-taking activity suggests the market is at a pivotal moment
When zooming out and looking at profit-taking behavior in all prior bull markets, it becomes apparent that this is not only a one-time or a short-term trend but rather a longer-term pattern in Bitcoin bull markets.
These support lines tend to hold for three to 18 months. The chart below shows that a break of the second support line in each bull market hahistorically confirmed that the bull market top was in.
Not only is the aSOPR close to breaking the seven-month support, but there is also one major difference in the latest pattern of this metric that could be a cause of concern.
Usually, the short-term tops of the aSOPR come in at higher levels each time, as the price increases further and rising confidence leads people to hold on to higher profits after each sell-off.
However, in the latest pattern, profits have been realized earlier in every sell-off wave for the last three months (see the red arrow), a pattern usually common after a bull market top was already in.
Short-term sellers are in the driver’s seat
The latest pattern could be explained by a slower price increase in recent months and a higher number of short-term holders realizing profits. This assumption is confirmed by looking at HODL waves, which visualize for how long Bitcoin is held.
The redder the color, the shorter the holding period. It becomes visible that it is short-term holders, who have held Bitcoin for between one week and three months, who have been primarily selling into the market as of late.
When looking at the profit-taking behavior of short-term holders only, one could infer that this cohort of traders might almost be done selling. The latest dip below the value of 1 shows that short-term holders have even started realizing losses.
In a bull market run-up, this is usually where a bottom in price can be expected, as selling activity tends to decrease significantly.
However, as bull market tops are not formed by a lack of sellers but rather by a lack of buyers, it is highly important to also look at the trend of the current demand side.
Current on-chain volume activity suggests that the capital inflow trend is still intact. A high number of coins are still changing hands, suggesting that buying activity is still ongoing. The realized price, which expresses this buying activity by valuing all Bitcoin based on when it last moved on a daily basis, gives a good idea of how much capital has moved in and out of Bitcoin.
A steep curve suggests high on-chain transaction volumes. If it is followed by a flat trend, it usually indicates the beginning of the bear market, as not enough buyers are coming into the market and willing to pay higher prices anymore. As long as this steep curve does not flatten, there should be no concern about a dwindling number of buyers.
Although this evidence suggests that the bull market top is likely not in yet, there is also no clear confirmation that sellers are done selling just yet.
A break of the aSOPR 10-day moving average support line could be confirmed in the next few days. This may signal a trend shift in sellers’ behavior from bullish to bearish. Therefore, a negative short- to mid-term scenario should be considered if this occurs.
Support levels in a bearish case
There are two major price support levels to look out for. The first one is around $51,325, which could be a support level where whales most recently acquired a high volume of Bitcoin.
The second price support level is the network-value-to-transactions (NVT) ratio price, which is currently at $47,679 and is a major price support level in Bitcoin bull markets.
If the market price were to fall significantly below the NVT price without a quick recovery within a few days, a detailed analysis of the demand side would be needed to judge if the market’s bullish structure has broken.
Market at a critical level, with strong support between $47,000 and $51,000
The supply side suggests that sellers are currently in the driver’s seat, even selling Bitcoin at a loss in the past few days. However, their selling activity is expected to significantly reduce over the next few days if current behavior stays in line with prior bull market sell-offs.
If that is not the case, the breakdown of the aSOPR seven-month support line is likely and could signal a trend shift from bullish to bearish selling. Further downside should be expected, with the next major support in the range of $47,000 to $51,000.
On the demand side, the capital flow still looks healthy. Enough volume is still willing to pay current prices, while whales have ramped up their buying again. Current price action is still above the NVT price, which suggests that current price fluctuations are still within the expected bullish territory.
Nevertheless, the demand side should be watched closely for a potential dry-up in on-chain volume over the next few days if the price comes close to the NTV price.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Nothing here should be considered investment or trading advice. Past performance is not a guarantee of future results. Every investment and trading move involves risk. The author owns Bitcoin. You should conduct your own research when making a decision and/or consult with a financial advisor.
‘Laser eyes’ to blame for Bitcoin correction — but it’s ‘very mild’ anyway
Cointelegraph By Martin Young
Veteran trader and chart guru Peter Brandt has made a cheeky correlation between the current Bitcoin market correction and the prevalence of ‘laser eyes’ on Twitter.
In a tweet on April 18, the technical analyst tied the correction to irrational exuberance in markets as exemplified by the meme:
“The chances of a correction in cryptos is directly related to the prevalence of laser eyes on Twitter. Want the correction to end? Get rid of your laser eyes.”
The laser eyes meme that initially swept across crypto social media in February 2021 saw crypto influencers, industry leaders, and regular users change their Twitter profile pictures to include laser eyes. The fad was to signify support for Bitcoin’s price surging until it hit $100K.
Coincidentally, it also roughly coincided with a local top for Bitcoin prices which reached $57,800 on Feb. 21 before correcting 25% to bottom out at $43,500 a week later.
In this week’s dip Bitcoin has corrected from its recent all-time high of $64,600 on April 14 to current prices of $53,600 — a move of 17% at the time of writing.
However Brandt’s actually not all that concerned about the pullback. Brandt’s draw down figures put the current correction closer to 20% which he claims is “very mild historically”. In an April 20 tweet he said there is a strong history of Bitcoin bull trends to test the 18 week moving average which was at $46,615 at the time. This would entail a much larger correction of around 28%.
Draw-down in Bitcoin of 20.0% to date is very mild historically.
There is a strong history of $BTC bull trends to test the 18 week MA (currently at 46,615).
I personally doubt such a retest will occur, but Bitcoin has a history of pulling surprises. pic.twitter.com/lyfXlgpAHK
— Peter Brandt (@PeterLBrandt) April 19, 2021
The average correction magnitude from the past 14 retracements is around 35% according to Brandt’s data. A fall to this level would send BTC prices tumbling back to $42,000.
Other analysts have also pointed to the historical record as a reason not to worry. ‘Rekt Capital’ tweeted that the February dip was three times deeper than this week’s dip:
In February, Altcoin Market Cap retraced -21%
Then Altcoin Market Cap rallied +90% afterwards
Now Altcoin Market Cap is down -7% from its All Time Highs
The February dip was three times deeper than this one
People called for a new Bear Market in February too#Crypto
— Rekt Capital (@rektcapital) April 21, 2021
Brandt explained his ‘laser eyes’ theory in interview with crypto researcher Laura Shin on April 13, stating that over-enthusiasm in any market is always a warning sign:
“The more people put the laser eyes, you know at least the market’s going to get choppy for a while and stop going straight up… When people start pounding their chest in public, ‘I own Bitcoin. I own Bitcoin. Look at me. I have laser eyes.’ That’s always going to be a sign that the market is at least going to take a rest.”
At the time of writing, BTC is trading down 5% over the past 24 hours at $53,600.
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