Bitcoin has dropped to “final support zone”, bulls need to defend $30k to avoid triggering sell-off

 


Bitcoin fell to the “final support zone” above $31,000 on July 15 as the downward move led to fresh predictions of a BTC price collapse.

Data from TradingView shows BTC/USD hitting a new local low of $31.175 on Thursday. Part of the reason for the deeper price drop was that Consob, the Italian market regulator, issued a stern warning about Binance Group that its companies are not authorized to offer investment services and activities. in this country.

Following a series of actions against Binance, a spokesperson for the exchange told mainstream media that its operations were not affected.

Read more: 10 reasons why everyone should try to invest in PrimeXBT

We take a collaborative approach when dealing with regulators, and we take our compliance obligations very seriously.”

Therefore, there is still little cause for optimism among spot traders. For popular trader Michaël van de Poppe, $31,000 represents Bitcoin's last hope to avoid a deeper drop.

“Bitcoin failed to hold $32.4k as support and dropped lower, below which it faces a final support zone to hold ($31-31.5k zone).

“If this area is lost, $29K and $24K are the next areas.”


The price pain is getting worse when trading volume is low, making it difficult to maintain the upward momentum.

However, as data from Glassnode reveals, it may be a seasonal phenomenon rather than an emotional one.

Co-founders Yann Allemann and Jan Happel argue that “investors are not selling, they are simply on vacation,” pointing to a significant reduction in transaction fees.

Bitcoin Bulls Must Defend $30k

The days of simple bitcoin trading by scanning technical charts and spot market order books are over.

The bitcoin market has matured since the March 2020 crash and participants can no longer turn a blind eye to macroeconomic developments and activities in the futures and options markets.

That especially happened on Thursday, when the risk-on mood on Wall Street put downward pressure on bitcoin and pushed the cryptocurrency towards the $30,000 support level, a loss of which could create pressure. sold heavily from options traders, leading to an unstoppable plunge.

With bitcoin locked in a wide $30,000-$40,000 range since mid-May, many options traders have sold put orders with a $30,000 strike and calls with a $40,000 strike. These transactions have been booked on Deribit and other crypto derivatives exchanges in the hope that the consolidation will continue, leading to implied volatility as well as the value of calls and puts

A put option gives the buyer the right but not the obligation to sell the underlying asset at a predetermined price on or before a specific date. The call option gives the right to buy. Simply put, selling a put is like providing insurance to a put buyer against a sell-off below a specific level – in this case, $30,000.

“After the sell-off in mid-May, volatility peaked, but since then spot prices have been trading within an underlying range. These types of consolidation periods are the perfect environment for lower volatility trades. The main idea is for price to fluctuate between support and resistance, and traders sell options with the expectation that these levels will hold,” said Greg Magadini, CEO and co-founder of Genesis Volability.


But bitcoin is pushing towards the lower end of the $30,000 range. If that level is broken, traders who have sold puts at that level can use downside hedging by shorting bitcoin futures or selling bitcoin on the spot market. That could add to the bearish pressure around the cryptocurrency, leading to a deeper price drop.

“If support or resistance levels are broken, traders will need to hedge quickly as prices will quickly move to new levels. Hedging activity from different traders on the same side of a volatile trade also creates a self-reinforcing event.”


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