Greg – BTC Week Flow 12/14/2023

Interesting

It is interesting to see that people hold BTC for the long term, but at the same time, let’s not forget that the market has trapped the majority. Remember when it was recently being talked about that BTC would reach 120,000? Well, in the end, it dropped to 16,000.

And since the majority are BTFD (Buy The F***ing Dip) and HOLD, it is normal for the numbers to be as shown in the image, indicating that most people hold for the long term, even up to 5 years.

Source: Fidelity

The Halving is approaching, what will happen this year? Every day there are more and more options available, making the market increasingly interesting, especially due to ‘Squeezes’, which will be a recurring topic. For those who don’t know, a ‘Squeeze’ occurs when there are so many buyers of options that they force the market maker to buy the underlying asset, like BTC or others, in order to cover their positions. This is not a speculative maneuver, but a purchase based on mathematical calculations.

Fuente: 

Source

Will we or will we not? We will notice it in the next live stream. We will try to develop a strategy to take advantage of it. Follow us on the Telegram channel.

Options Flow Analysis

We are options and flow analysts, and for us it is crucial to observe how the market is based on its derivatives. That’s why we analyze the market from this perspective. Flows are everything, and if you mix them with a little FOMO, it can be incredible. We will try to identify these points.

Let’s analyze flows and positions. Last week we mentioned that large investors were positioning themselves between 43,000 and 45,000, as observed in the options.

Source : amberdata

And we observe that almost everything by the end of the year, 48% of the options market is focused on the December expiration. For a good ‘squeeze’, I tell you that it is favorable if many factors come together at the same expiration, and the closer it is, the more the market maker (MM) will have to work.

Source: greekslive

But what happened heading into the weekend?

The ‘Wall’, that wall where many had positioned themselves between 43,000 and 45,000, was reached by the market, and what happened next was that it stopped. That’s how a wall of calls works: what do all those who had options there do? Well, when they touch money, they leave, sell, and invest the flow.

Where we see that the market is not following is in the curves and structures of volatility.

If we observe the Skew of the Calls, that is, what is paid for them, we notice how the interest has decreased. The blue line represents the current moment, and the other lines are from previous weeks. This means that, for now, the desire to pay for higher volatility has disappeared. To understand it, FOMO is no longer FOMO.

Source : amberdata

As the market currently shows average volatility, calls are losing value. If this trend is not reversed, the only possible direction is downwards.

The options market, with its volatility and diverse components, offers a deep insight into market appetite. Our expertise lies in this field, and we are here to help you understand these flows. Although I am not an expert in cryptocurrencies, I have knowledge in options and understand that flow is an essential aspect of the market, something that is becoming increasingly relevant in the world of cryptocurrencies.

The price movement in the last few days reinforces this idea.

Source: CoinCall 

You may be wondering, in a free fall like the one on Monday, why did it suddenly stop in the 40,000 to 41,000 range?

Once again, market makers come into play. If you look at the chart below, that range was filled with options for buying, that is, acquired puts, or even more purchased puts. The market crashes and stops again, but now at a wall of puts.

What happens at this wall? Why does it stop? Just think: if you had puts and their value has multiplied by 10 or 20 in two days, what would you do with them? Most likely, you would close a large portion of those positions, right? Well, if you close, the market maker (MM) does it too, and thus the market flow changes again. It’s all about flows.

Source : amberdata

We observe that above 45,000 there is not much interest; everything seems to concentrate between 39,000 and 45,000. This is the key area for the end of the year and beyond. We have detected a large volatility seller that could turn 44,000 into a magnet point for the end of the year.

It is also worth mentioning that all options, as they approach their expiration, tend to lose their value until they reach zero, just like all their ‘Greeks’. This means that everything converges to zero. Therefore, the 44,000 towards the end of the year could be an interesting point, since it is where everything tends to this null value.

We notice that the ‘gamma’ of the market is at one extreme. I think there are more puts currently, and if these expire worthless, they could push the market higher.

Source: amberdata

Keep in mind that we are talking about options and what we see in the options books. There are other factors, but this is what we see and believe offers a certain advantage.

‘Be Water, My Friend’, and move with the flow.”

If you want to be up to date with this information, subscribe to our newsletter  https://substack.com/@tokencimiento?utm_source=edit-profile-page

Or Follow us on Telegram: https://t.me/Tokencimiento

Made in Spanish by Greg

Translated by Coincall Academy