Bitcoin Market Analysis- June Part 2

BTC and ETH TL;DR

• Bitcoin & Ethereum are up by 7.05% & down by 3.60%, 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 judgment regarding how positioning across derivatives markets may influence the movement of Bitcoin. 

Figure 1: Greythorn Option Flow Model 180623. Source: Proprietary - Greythorn Research Team. Data: Deribit.

Affected by the SEC lawsuits against Binance and Coinbase, crypto markets suffered selling pressure over the past fortnight. However, due to last week’s pause in interest rate hikes, Bitcoin recovered to above $26,000 and opened at $26,336 on Monday morning. 

From the perspective of options supply, increased volatility can be expected at several price levels, including $24,000, $25,500, $26,000, and $27,000.

If the price decreases, $25,000 is the first weak support level, followed by the interval between $20,000 and $23,000 as a broader support zone. To the upside, the interval between $27,000 and $34,000 forms a large resistance zone. Specifically, $26,500 is the first significant resistance that the price needs to challenge, followed by $28,000 and $29,000.

Gamma supply is ~25% higher than that of two weeks ago, suggesting a flatter market for the following week. Liquidity provision continues to dominate, particularly at $30,000. 

Considering the macro data from traditional markets to be released in the second half of this week, increased volatility can potentially flow through to digital asset markets. 

• UK CPI data is set to be published on Wednesday, followed by the BoE Interest Rate Decision and MPC Meeting Minutes on Thursday. 
• US Federal Chair Powell and Governor Jefferson plan to testify to the Senate Banking Committee on Wednesday, along with Initial Jobless Claims on the same day. 
• Existing Home Sales and Crude Oil Inventories will be released on Friday, together with SNB Interest Rates.

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’s 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

This presentation has been prepared by Greythorn Asset Management Pty Ltd (ABN 96 621 995 659) (Greythorn). The information in this presentation should be regarded as general information only rather than investment advice and financial advice. It is not an advertisement nor is it a solicitation or an offer to buy or sell any financial instruments or to participate in any particular trading strategy. In preparing this document Greythorn did not take into account the investment objectives, financial circumstances, or particular needs of any recipient who receives or reads it. Before making any investment decisions, recipients of this presentation should consider their own personal circumstances and seek professional advice from their accountant, lawyer, or other professional adviser. This presentation contains statements, opinions, projections, forecasts, and other material (forward-looking statements), based on various assumptions. Greythorn is not obliged to update the information. Those assumptions may or may not prove to be correct. None of Greythorn, its officers, employees, agents, advisers, or any other person named in this presentation makes any representation as to the accuracy or likelihood of fulfillment of any forward-looking statements or any of the assumptions upon which they are based. Greythorn and its officers, employees, agents, and advisers give no warranty, representation, or guarantee as to the accuracy, completeness, or reliability of the information contained in this presentation. None of Greythorn and its officers, employees, agents, and advisers accept, to the extent permitted by law, responsibility for any loss, claim, damages, costs, or expenses arising out of, or in connection with, the information contained in this presentation. This presentation is the property of Greythorn. By receiving this presentation, the recipient agrees to keep its content confidential and agrees not to copy, supply, disseminate, or disclose any information in relation to its content without written consent.