Crypto Market Insights 6 July 2022 — Technical Levels & Option Flow

Summary

Overall market:

• BTC is down

  73%

  from all-time highs.

• BTC is ranging between

  $18,750

  and

  $21,900

  .

• Volatility increased from

  70%

  to

  90%

  .

• Combining technical levels with our option flow model, we are expecting Bitcoin’s price to range between

  $17,600

  and

  $21,500

  over the next week.

• Significant price levels:
• Supports:

  $18,750

  and

  $17,600

  .

• Resistances:

  $19,700

  and

  $21,900

  .

Technical Levels

Bitcoin ranged between $18,750 and $21,900 over the last fortnight. It reached a local high at $21,888 on 26th June, which was successfully called in our previous newsletter. $20,000 was a temporary support, with the price eventually breaking down at this level after eight trading days. There were seven consecutive red candlesticks since 26th June, and it finally found its current support level at around $18,750.

Regarding volatility, volatility dropped from 108% to 70% after the decline in early June. However, volatility has caught a bid since last Sunday and is currently at 90%. Downside risk will always be the key focus during a bear market which is why we can expect more changes like this across volatility.

We forecast that Bitcoin will continue to range between $17,600 and $21,900 over the following week.

• The first support level is at around $18,750, followed by the second support level, which was a recent low, at approximately $17,600.
• The first resistance level is around $19,700, followed by a second resistance level at approximately $21,900, which Greythorn’s Option Flow Model also indicates.

For more information regarding support and resistance levels, please refer to Support (Support Levels): https://www.investopedia.com/terms/s/support.asp
and Resistance (Resistance Levels): https://www.investopedia.com/terms/r/resistance.asp .

Greythorn Option 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.

Bitcoin opened at $19,297 this week after displaying weakness over the past week. Increased volatility is expected at a series of price levels that have extremely negative net GEX, namely $18,000, $19,000, $20,000 and $21,000. As per the graph above, there are currently no significant support levels. However, $18,600, $18,400, and $14,500 can be regarded as very weak support levels. There is a strong resistance level at $19,500 with a large net GEX. $20,500 and $21,500 are likely the second and third resistance levels if Bitcoin increases past $20,000. The market will likely be more volatile than last week, as indicated by lower negative GEX and fewer support levels.

In summary, Greythorn views that Bitcoin will range below $21,500 based on our option flow model. In conjunction with our technical analytics, both techniques display that the market is likely to be more volatile over the upcoming week than it was over the past week.

For an introduction to Greythorn Option Flow Model, please refer to our newsletter from 22nd June 2022. https://greythorn.substack.com/p/greythorn-asset-management-newsletter

References

Squeeze Metrics, ‘The implied order book’, 2020.

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 circumstance 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 fulfilment 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.