11.19 Crypto Market Update and Investing Report
BTC On-Chain Analysis | Options Analysis | NOOBIES: How to use the fear and greed index
When can we start buying again?
Overview
· Major News
· Market Update
· BTC Options Chains Analysis
· NOOBIES lesson of the day: How to use the Fear and Greed Index
Major Market News
· Binance.US aims for major funding says Zhao, CEO of Binance. Binance is another Exchange looking to capitalize on the recent trend of US exchanges locking in major funding. (CRO, FTX, Coinbase)
· Bitcoin clings to 56K as whales keep buying the dips.
· Shiba Inu in danger of “topping signal” as SHIB loses 50% in 3 weeks. To read why Meme coins are not the best investment vehicles please refer to my past report.
· In massive news for Ethereum adoptions, Binance opens layer-two deposits with Artibrum One integration.
· Near Protocol (NEAR) plans to distribute 40M into over the next four years in its DeFi sector. Near is a PoS public blockchain.
Market Update
· Bitcoin (BTC) stages a small rally to 57.6K after dipping as low as 55.6K, taking a break from a pullback that started on 9 Nov.
· Bitcoin Dominance (BTC.D) goes as low as 42.42% in a strong move down as traders take the quiet market as opportunity to enter altcoins.
· Ethereum (ETH) is up 5.2% rejecting the strong down move yesterday. It currently sits at 4,269k.
· Total Market Cap (TOTAL) is up a strong 4% to 2.55.
· Major Layer-1s are all up today.
o ADA +4%
o AVAX +7.3%
o BNB +9%
o DOT +6.2%
o SOL +9.7%
o LUNA +6
· Fantom (FTM) and Elrond (EGLD) are having particularly strong days. +21.7% and 16%. Elrond recently opened the Maiar Exchange which likely onboard many new users to the network. Elrond is a good candidate to have a strong recovery when the current down cycle is over.
Bitcoin Fear and Greed Index 34 Fear
Bitcoin Google Trends 40
Insight
Alts are taking advantage of the quiet day in the market. Volatility is low despite the sell-off all week. Layer-1 ones are having a strong day followed by metaverse and game tokens. Traders should beware of a relief rebound that can trap buyers in the short term. The weekend can prove to be interesting but the next week will likely decide where price ultimately decides to proceed.
Analyzing Options
In the last two reports we peered into On-chain analysis and technical analysis. This report will examine what options are implying about bitcoin price.
Volume
The Nov 25 expiration currently holds the most options volume by a substantial amount. The volume is equally spread out between calls and puts on this expiry. The two days ago it was learning heavily towards calls. The market has rapidly adjusted. This volume emphasizes that these expirations will hold a lot of influence on the overall market.
Max Pain
Looking at max pain, we see that 59K is the price where the most options holders would incur the most financial losses. Price tends to be attracted to this number near expiration. Two days ago it was at 56k.
Options Chain
Puts
The Nov 25 50k put delta is currently at .09. The options market is telling us that there’s a 91% chance that the price of BTC will be above 50k by the end of the Nov 26 trading day.
The level of the trendline from yesterday was 53k. There is no 53k option but when can conclude that it would probably be close to .19 delta. This means there is an 81% chance price is above this number at expiry. Delta is on the far right of the chart.
Calls
The call options chain shows us that the 62k Nov 25 Call has a .24 delta. This tells us that on a basic level that BTC has a 76% of being below 56k by expiry.
The data, when combined shows that the market is saying there is a 78.5% chance that price will be between 50K and 62k at expiry on Nov 25. The chance that price goes below the 53k trendline is only 19%. If you double the 19%, it calculates our probability of touch. (19*2) There is a 38% chance that our trendline get touched. 38% is not a high probability of touch. All these numbers are implied and in no way guaranteed. Markets are typically very efficient and that’s what make it hard to profit in the short term
Final Analysis
The Wednesday report revealed that on-chain metrics were showing a low probability of a complete sell-off. Our technical analysis showed us that 53K was a strong trendline that intersects with the Nov 25 expiry. We combine this data to with our newly acquired options data.
Things we can conclude:
· Market is highly NOT likely to be in a sell-off
· Market is in a short-term downtrend
· 53k trendline has a low probability of being touched by Nov 25
· Price will gravitate to 59k Max Pain the closer we get to Nov 25
· The market is in a fear state (34)
· We have a high probability of staying between 62k — 53k
From this data we can make conclusions when to increase the size of your portfolio. From what I interpret, waiting for a 55–56k would be a very efficient area to increase your portfolio and buying. Our current price is too far away from the max pain and our trendline has a low probability of being touched. Keep in mind, this data changes day to day and next week could bring different numbers but from the current standpoint, we tentatively conclude to increase positions between 55–56k.
Notable Events
- Up-and-coming crypto PowerLedger (POWR) is listed on Crypto.com exchange today
NOOBIE lesson of the day
Tools: Fear and Greed Index
The Fear and Greed Index is very simple tool and one of the most important. This index is used to measure crypto market sentiment. It basically measures human emotion in the market. Bloomberg originally created it to measure stock market sentiment, and the model was later adopted to bitcoin. It uses 6 factors to measure sentiment Volatility, Market Momentum/Volume, social media, surveys, Dominance (BTC.D) and trends. It takes all those factors and reduces them to a number from 0–100. O is extreme fear and 100 represents extreme greed.
Fear and greed are two of the biggest market drivers in stocks and crypto. Knowing how the market is feeling is a very powerful tool in helping traders make decisions. I add the Fear and Greed Index to almost every report for this reason.
To utilize the Fear and Greed Index you want perform the opposite of market sentiment. If the market is very greedy, it’s time to reduce positions. If the market is very fearful, its usually a great time to increase positions. In the past year, if you would have bought bitcoin/crypto when the index is at 10 Extreme Fear and reduced when the market is in Extreme Greed, you would have had an amazing year trading.
If there is one tool that every trader should utilize, no matter the trading style, the Fear and Greed index is the one. It’s a very simple tool to understand I hope the fear and greed index helps you view the market in a different manner and helps you become better traders, investors and/or hodlers. The Fear and Greed Index
Thanks for reading and I appreciate all the feedback I am receiving from the reports. Next Week I will visiting family and my reports will be a little less in depth. But fear not, I’ll keep researching and writing because the market never sleeps.
Enjoy your weekend, see you Monday fam!
-Gabi
