Throughout the rally of Bitcoin in recent weeks, the trading activity on major BTC futures exchanges has continuously increased. Despite the recent drop, the open interest on top futures trading platforms remains above $1 billion. When the open interest is high, the likelihood of a short or long squeeze increases, which may result in large spikes in volatility.
The Chicago Mercantile Exchange (CME), in particular, has seen a noticeable increase in Bitcoin futures trading activity. Interestingly, Arcane Research reported that large traders who hold a minimum position of over 25 BTC more than doubled on the CME in 2020.
The researchers at Arcane explained that this trend shows increased institutional demand for Bitcoin. The heightened trading activity on CME, which tailors to accredited and institutional investors, can cause short-term volatility to increase due to the large sizes of trades. The researchers said:
“Large traders hold at least 5 futures contracts, equaling a minimum of 25 BTC (5 BTC per contract). The average in 2019 was 45 large traders without any notable growth throughout the year. However, this number has more doubled in 2020 and we saw a new record of 102 large traders two weeks ago. This is perhaps one of the best indications of increased institutional demand for bitcoin exposure and we already know that investors like Paul Tudor Jones is a part of this growing group on CME, currently the second largest futures market for bitcoin.”
Although the institutional demand for Bitcoin has been rising, the futures market remains a major factor driving volatility.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 20,148.54.
The projected lower bound is: 17,095.25.
The projected closing price is: 18,621.89.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 49.6001. This is not an overbought or oversold reading. The last signal was a sell 7 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 62.76. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 4 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 43. This is not a topping or bottoming area. The last signal was a sell 8 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.
Rex Takasugi – TD Profile
FOREX BTC= closed up 1,464.750 at 18,473.170. Volume was 48% below average (neutral) and Bollinger Bands were 49% wider than normal.
Open High Low Close Volume 18,103.750 18,561.119 18,008.070 18,473.170 322,399
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 18,068.81 14,926.32 11,421.58 Volatility: 89 61 49 Volume: 756,430 624,320 602,587
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX BTC= gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FOREX BTC= is currently 61.7% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect moderate flows of volume into BTC= (mildly bullish). Our trend forecasting oscillators are currently bullish on BTC= and have had this outlook for the last 64 periods.