Bitcoin’s (BTC) dip below the $30,000 level is likely a short-term correction in an otherwise bullish trend, Rachel Lyn, CEO of derivatives decentralized exchange SynFutures, said in a Friday note.
“Despite bitcoin’s fall below $30,000, there is a conspicuous lack of $30,000 call [option] selling from bearish traders,” Lyn said. “This suggests they don’t foresee the $30,000 level transforming into significant resistance, at least in the near term.”
The largest cryptocurrency by market capitalization, bitcoin traded above $30,000 for most of July, reaching a near one-year high of $31,800 price earlier this month, with asset management giant BlackRock’s spot bitcoin ETF application and a partially favorable court ruling about Ripple’s XRP among the positive catalysts. The uptrend, however, fizzled recently with prices dipping below $29,000 earlier this week before a modest bounce to the current $29,350.
Losing the $30,000 level, however, is likely just a short-term deviation, according to Lyn.
“While this technical drop may induce concern, given the robust uptrend over the past six months, it’s sensible to consider this merely a short-term correction,” she said, adding that the $31,000 call option “continues to attract high open interest” from traders. Lyn said this is a sign that the price level poses a “potent resistance” in case of a bounce in BTC’s price.
Options are trading instruments that give investors the right to buy or sell an underlying asset at a set price at a later date. A call option buyer gets the right to buy and those who purchase puts get the right to sell. For example, bitcoin traders often use call options to make cheap, leveraged bullish bets on the price.
Singapore-based crypto services provider Matrixport advised investors to sell spot BTC and buy call options instead to optimize returns at a time when volatility is suppressed in the crypto market.
The CoinDesk Bitcoin Price Index is currently trading at $29,350, down 1.5% over the week.
