Greythorn Option Flow Model
Following the >4% increase on Friday after last week’s OpEx, Bitcoin fell & repositioned itself at $20,998 over the weekend.
Increased volatility is expected at a series of price levels with negative option supply, namely the interval between $14,000 and $17,000, $18,500 to $20,000, $20,750, $23,000 and $25,000.
Bitcoin is currently hovering around a key level at $21,000.
Option supply is largely positive, explaining the recent trading range after last week’s brief rally. This supply is observable on the graph by viewing the magnitude of liquidity provision over liquidity-taking, particularly at $22,000.
Traders will be eyeing this week’s midterm elections in the US and CPI release on Friday, accompanied by UK GDP and German CPI data on the same day. It’s important to note that this market always welcomes catalysts like these when getting ready for the next move.
Greythorn believes that Bitcoin will range between $18,000 and $22,000 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
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.