Cryptocurrency Derivatives Series: Snippets of Bitcoin Technical And Derivatives

From the last couple of days, bitcoin price (BTCUSD at Coinbase), in the minor trend, has been oscillating between $9,335 to $8,815 levels to develop a range-bounded trend.

The pair has formed hammer candle at 9,074 levels, similar pattern popped-up at 9,052 levels as well. Overnight, we’ve noticed the buying sentiment soon after this formation.

Consequently, the consolidation phase seems to be continuing upon these bullish patterns, while the current minor trend attempts to take-off rallies above 7 & 21-DMAs on these bullish patterns.

Please be noted that $8,585 levels act as strong support zone, for now, more rallies appear to be on the cards as both the leading oscillators (RSI & Stochastic curves) signal buying momentum.

As BTC has spiked from $3,858 since mid-March to the recent highs of $10,079 levels, which is 160% rallies on a broader perspective, more upside risks are still on the cards in the days to come with the strong supports of $8,585 and $7,950 levels (i.e. 100-DMAs), hence, long hedges have already been advocated using CME BTC Futures when the underlying BTC was trading at $4,927 levels, and we wish to uphold the same positions with July months deliveries. It is unwise to keep speculating on the next upside target and accumulate fresh bitcoins. Instead, one can certainly uphold the above advocated long hedges for now (spot reference: 9,202 levels).

Typically, now a days, futures contracts are rather utilized as speculative instruments, with the prime objective of deriving a capital gain or loss out of negligible amount of capital, while it is actually meant for hedging purpose.

During course of the COVID-19 pandemic circumstance, the virus ravaging the entire global financial outlook recovering from the shock, the crypto derivatives market started growing significantly, reaching an all-time high volume of $600 billion in March.

While the total volume on the bakkt platform last week was $80 million, marking a 17 percent rise from the prior week, as per the sources. Open interest of these crypto-futures of monthly tenors also surged considerably, mounting by 18% as another $9.3 million has been included remarkably.

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