from all-time highs.
over the next week.
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.
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
Squeeze Metrics, ‘The implied order book’, 2020.
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