Bitcoin Market Analysis - June Part 1

BTC and ETH TL;DR

• Bitcoin & Ethereum are up by 1.37% & 4.65%, respectively, over the past fortnight.
• Greythorn views that Bitcoin will trade between $25,000 and $30,000 over the upcoming week based on our option flow model. 

Greythorn 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.

Figure 1: Greythorn Option Flow Model 050623. Source: Proprietary - Greythorn Research Team. Data: Deribit.

Following a strong jobs report, Bitcoin repositioned itself over the past week and hovered above $27,000 on Monday morning. 

From the perspective of options supply, increased volatility can be expected at several price levels, including $22,000, $24,000, $26,000, and $27,000.

If price decreases, a correction and consolidation can be expected at $25,000, which serves as the only support level to the downside.

Resistance levels are denser and more significant compared to support levels. Should price move to the upside, $28,000 can be seen as the first and most considerable resistance level, followed by $29,000 and $30,000 as the second and third. The interval between $32,000 and $35,000 forms a mild resistance zone, indicating relatively higher liquidity at those prices.

Gamma supply is ~50% higher than that of the previous fortnight, signalling a relatively flat market for the following week. The magnitude of liquidity provision is far greater than liquidity taking, particularly at $28,000. 

Traditional markets remain quiet in terms of macro indicators to be released this week, however, data from Japan regarding GDP, as well as US Crude Oil Inventories and Initial Jobless Claims, can potentially introduce volatility to the market.

Greythorn believes that Bitcoin will trade between $25,000 & $30,000 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.

Important notice and disclaimer

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