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The ‘fear’ indicator for Bitcoin options indicates traders’ regulatory fears.

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SEC Chair Gary Gensler confirmed on Tuesday his plan to track cryptocurrencies. This important Bitcoin options and futures indicator confirms traders’ concerns about the regulations.

Market Analysis

For 46 consecutive days, Bitcoin has been trading at above $42,000. Starting on September 21, the cryptocurrency’s price began to drop. In the last few days, there was an accumulated loss of 13%. This was enough to wipe out all the gains accumulated since August 6. According to records, the last bearish cycle averaged 79 days to reach $42,000. Traders are paying attention to the Federal Reserve’s monetary meeting. At the gathering, the financial authority will reveal if it will cut back on the $120 billion repurchase stimulus package. As this is happening, China’s equity markets revived at 1% on September 21.

Is China behind the recent correction?

The disconnect between the markets’ recovery and Bitcoin’s performance has led investors to examine if the cryptocurrency regulation is responsible for the bearish scenario.

In a comment to the Washington Post on September 22, SEC Chair Gary Gensler stated stablecoins are instruments that should be used in casinos. Attorney Grant Gulovsen commented that the impending regulation would have a short-term bearish effect. Investors despise uncertainties about what services and products are allowed.

A point to note – when Bitcoin reached the $42,000 level, it put an end to the small bear cycle. Were Elon Musk’s comments on cryptocurrency mining energy use behind this?

To minimize the risk of another price collapse, investors should pay attention to the 25% delta skew. It compares call and put options simultaneously.

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