Data shows that the probability of BTC breaking 10,000 by June is only 16%. Do you believe it?

As Bitcoin continues to fluctuate significantly, people tend to look for more reliable "value discovery" logic from many interpretations.

As a data-based research organization, Arcane Research also analyzed the "recovery" of Bitcoin since the "March 12" crash from the perspectives of macroeconomics, transactions, and on-chain data, and also looked for the next possible "rising point". Its core views are as follows:

• After a 70% increase, cryptocurrency investors still cannot escape from "extreme fear";

• A backwardation in the cash-futures price gap indicates a bearish market;

• The volatility of the currency price has reached its annual peak and will continue;

• BTC turnover rate has escaped from the trough, which may bring about the possibility of rising;

• Prediction: The probability of BTC rising above $10,000 in June is only 16%.

After a 70% increase, cryptocurrency investors are still "extremely afraid"

We often hear about the daily fear and greed index, but I am afraid that only by looking at it over a longer period of time can we truly understand the meaning of this data.

The chart below shows Bitcoin's fear and greed index over the past year, with the vertical axis ranging from extreme fear to extreme greed from bottom to top.

Source: Alternative

As can be seen from the chart, “extreme fear” has only occurred twice in the past year. The first occurred in early August last year, when Bitcoin experienced a sharp rise and fall, and the market experienced a very short period of extreme fear.

The second time was the two weeks after the “March 12” crash. Although the price of Bitcoin has risen by about 70% from its lowest point, it has not fundamentally reversed the market’s confidence. The fear and greed indexes were 12 and 14 respectively in the past two weeks, still in extreme fear.

Such a long period of panic also occurred in December 2018, when Bitcoin halved within a month and fell all the way to the bottom range of $3,200. This indirectly shows that for current market participants, Bitcoin at $3,800-6,000 may be the lowest value of their psychological expectations.

Odaily Planet Daily Note: The panic index threshold is 0-100, and the influencing factors include: volatility (25%), market trading volume (25%), social media heat (15%), market research (15%), the proportion of Bitcoin in the entire market (10%) and Google hot word analysis (10%).

Backward price gap indicates bearish market

The “March 12” crash brought two significant changes to the Bitcoin futures market: one was the sharp drop in trading volume; the other was the abnormal phenomenon that the transaction price of futures was lower than its underlying spot.

Skew data shows that the open interest of the XBT/USD (Bitcoin) perpetual contract on the BitMEX platform fell to 55,000 BTC, a new low in 18 months. According to data from TokenAnalyst, the number of Bitcoins withdrawn from BitMEX in the past two weeks exceeded the number of Bitcoins deposited, resulting in a net outflow of 67,000 Bitcoins on the platform.

Futures trading volume reflects the sluggish trading atmosphere in the contract market and the temporary rest of the market's main players; in the traditional stock market, the reverse price difference of stock index futures relative to the spot index is a signal of a bearish stock market. Therefore, Arcane Research said that this is not necessarily a good sign for Bitcoin.

Before the crash, BTC futures prices in June and September were higher than spot prices, but now the situation is reversed.

But there is no shortage of arbitrage opportunities in such a market. Arcane Research pointed out that this is good news for longs who want to prepare to open positions, which means that they can relatively easily return to the premium of futures prices.

The volatility of the currency price has reached its annual peak and will continue

One of the main reasons why contract players leave the market is the current high volatility of Bitcoin.

According to data from Cryptowat.ch, the 30-day volatility of Bitcoin prices has reached its highest level in a year, currently exceeding 9%. The higher the volatility, the greater the uncertainty of asset returns.

Arcane Research pointed out that under the systemic risk of global economic turmoil, the price trend of Bitcoin will still be difficult to stabilize in the future, so it is recommended that market participants should act with caution.

Source: cryptowat.ch

BTC turnover rate breaks out of the trough, which may bring about an increase

Arcane Research also introduced us to a less common but interesting indicator: Velocity (Bitcoin network speed). The data comes from Bytetree, an organization that has been monitoring this indicator for a long time.

The Bitcoin network rate refers to the speed at which Bitcoin changes hands, with an observation period of 12 weeks and a unit of 0-2000%. If the Bitcoin rate is 1000% within 12 weeks, it means that Bitcoin circulates 10 times a year; a high network rate means that Bitcoin circulates faster and the market situation is better.

According to Bytetree statistics, since 2013, there have been only five times when the rate was lower than the "historical danger level" of 600%, namely March 30, 2014, August 1, 2018, March 13, 2019, and August 20, 2019 - last week.

Typically, low velocities tend to lead to lower prices. Fortunately, just last week, we can see that Bitcoin has come out of a 600% low velocity. Arcane Research believes that this may be a bullish signal, indicating that Bitcoin is moving in large quantities and playing a positive role in financing.

Prediction: The probability of BTC breaking 10,000 in June is only 16%?

According to data from Skew markets, on March 29, the Put/Call ratio of Bitcoin options contracts reached 1.10, the highest level since March 13.

In traditional financial markets, a Put/Call ratio above the 0.7-1 range indicates high short pressure, as traders are more likely to sell than to buy. This selling pressure can have many reasons, chief among which is the expectation of falling prices.

Before the March 12 crash, the ratio soared to 1.39, the highest level in the past three months; two days after reaching 1.39, the spot price of Bitcoin fell from $7,800 to below $4,000. At the same time, the Put/Call ratio of Bitcoin also fell below 1.08.

So far, the ratio has risen back to 1.10, which may mean that the price outlook for Bitcoin is not optimistic.

According to Skew data, prices on various options platforms indicate that by the end of June 2020, the probability of BTC breaking through $10,000 is only 16%, while the probability of falling below $5,000 is as high as 80%.

However, using option prices to predict underlying prices is not effective in traditional financial markets, let alone in the digital currency market where the financial derivatives market is not yet mature. So, let’s just laugh at this data.