Crypto Market Insights 17th August 2022

MARKET SUMMARY

  • Bitcoin & Ethereum are up 2.76% & 11.32%, respectively, over the past fortnight.
  • The Goerli testnet successfully merged on the 11th of August, setting up mid-September for the final stage of the Merge.
  • The U.S. Treasury has banned the usage of the crypto-mixing service Tornado Cash.
  • US CPI came in lower than expected. 8.5% vs 8.7% est.
  • Traditional markets, the S&P 500 & Nasdaq 100, are up 4.49% & 6.13%, respectively, over the past fortnight.
  • Greythorn views that Bitcoin will remain between $21,000 & $27,000 for this week.

GREYTHORN OPTION FLOW MODEL

Figure 1: Greythorn Option Flow Model 150822Source: Proprietary — Greythorn Research TeamData: Laevitas

Bitcoin has increased 2.76% over the past fortnight and is currently trading at ~$23,900.

Increased volatility is expected at a series of price levels with negative net GEX, namely the interval between $15,000 and $23,000, $25,500, $30,000 and $32,000.

There are very few significant support levels from the graph above, with $24,000 and $21,000 as the only two relatively weak support levels. As the market approaches the 19/08 weekly expiration, $24,500 is expected to become another weak support/resistance.

In contrast, several strong resistances can be observed. $25,000 is the first significant resistance level, followed by $26,000 and $27,000 as the second and the third resistance levels, as suggested by the considerable option supply at these prices.

Net GEX for this week is 2.5x that of the previous fortnight, indicating a flatter market with more liquidity and lower crash risk. The graph also displays that the magnitude of positive GEXs at $25,000, $26,000 and $27,000 is remarkably greater than any of the negative GEX levels. Thus, much of the current positioning across options markets is providing liquidity rather than taking it.

Greythorn believes that Bitcoin will range between $21,000 and $27,000 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 here.

Disclaimer

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.

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Greythorn Asset Management

Greythorn Asset Management

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Melbourne-based asset management firm, focused primarily on Tech | Web3 | Crypto | Blockchain | DYOR/NFA. Subscribe to hear our latest industry insights.