BTC and ETH TL;DR
- Bitcoin & Ethereum are up 7.00% and 5.10%, respectively, over the past fortnight.
- Greythorn views that Bitcoin will trade between $28,000 & $35,000 over the upcoming week based on our option flow model.
Greythorn Option Flow Model
Greythorn’s view of markets is significantly dependent on supply & demand mechanics. As crypto markets mature & attract large flows of capital, their derivatives markets also grow. Derivatives markets tend to have a large influence on their underlying assets as market participants tend to hedge their exposure through spot & futures markets. Our proprietary option flow model has been developed in-house to inform our judgement regarding how positioning across derivatives markets may influence the movement of Bitcoin.
Bitcoin continued its rally from last weekend as the impacts of bankruptcies on markets have been muted. Opening at $28,353, Bitcoin is trading over $30,000, for the first time since June 2022.
From the perspective of option supply, increased volatility can be expected at several price levels, including $26,000, $27,500 and $32,000.
Taking the weekly opening price as a benchmark, if price decreases, the only support indicated is $28,000. If price increases further to the upside, $29,000 is the first resistance, followed by a dense series of resistance levels, namely, $29,500, $30,000, $31,000, as well as the interval between $35,000 and $38,000.
Gamma supply is approximately the same as a fortnight ago, indicating the flat market is still likely to stay for the following week. Liquidity provision currently diminishes any liquidity-taking, particularly at $30,000.
There are several macro indicators to be released in traditional markets, such as US CPI on Wednesday, Crude Oil Inventories, FOMC Meeting Minutes, Initial Jobless Claims, PPI the following day, and Retail Sales on Friday. BoE’s Bailey is set to speak on Wednesday, along with UK GDP & German CPI on Thursday may also bring volatility from European investors.
Regarding crypto markets, Ethereum’s Shapella Upgrade is set for Wednesday & is one of the more considerable events for the year.
Greythorn believes that Bitcoin will trade between $28,000 and $35,000 over the upcoming week based on our option flow model.
For an introduction to Greythorn Option Flow Model, please refer to our newsletter from 8th June 2022. https://greythorn.substack.com/p/greythorn-asset-management-newsletter
The information contained within this newsletter is purely our opinion and should not be considered by readers to constitute any form of financial or investment advice. We encourage readers to conduct their own research into any financial product that they are interested in and Greythorn will not incur any liability for potential losses.