On November 11, the Bakkt Bitcoin futures market almost reached an all-time high in volume, closing the day at $13.8 million. This was slightly lower than the actual all-time high of $15.5 million, reached on November 8.
While Bakkt is performing exceptionally well, especially compared to its volume in early October, the interest in Bitcoin from institutional investors has been dissipating. This has been especially visible in the CME market, whose volume has returned to 2018 levels.
The Bitcoin price, however, has created a bullish trading structure and looks likely to break out eventually.
Crypto trader @CanteringClark stated that since the majority of shorts have been closed, this might not be the best position to initiate short trades. Also, he noted that this is the fifth week in a row in which the delta has been negative. Since the price has increased during this time, numerous shorts have likely been liquidated.
I am not so sure I want to be a seller of this market right now in this very position. All shorts have been closed out.
— Cantering Clark (@CanteringClark) November 12, 2019
Option delta is used to measure the sensitivity of the price of the option to a change in the underlying asset price. A negative delta is present in short calls and long puts, while a positive one in long calls and short puts. To simplify, a negative delta is present when the investor believes the price of the underlying will decline and vice versa.
The tweet alludes that if the Bitcoin price gets to the $8300 level, he will look to initiate longs. The $8300 level is also the month of October price open.
Let’s look at the price movement and see if it will get there.
Bitcoin Descending Wedge
The Bitcoin price has fallen to the support area at $8600. Furthermore, it seems to be trading inside a descending wedge, which is considered a bullish pattern.
Currently, it is trading right on the support line of the wedge.
Looking closer at the price movement, we can see bullish divergence developing in the RSI. This makes it likely that the price will break out from the wedge.
This hypothesis is strengthened by the presence of long lower wicks and the fact that the price is trading inside a significant support area.
The $8300 price level coincides with the next minor support line. Additionally, using the volume profile indicators, we can see that there is strong support all the way to $8000.
However, a breakdown from the wedge would be required for the level to be reached.
Disclaimer: This article is not trading advice and should not be construed as such. Always consult a trained financial professional before investing in cryptocurrencies, as the market is particularly volatile.
Images courtesy of TradingView, Twitter.
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