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Bitcoin may be poised for another downward move if a slew of technical insights are on the mark.
The largest cryptocurrency by market value has retreated more than 50 percent this year and recently has been sitting in a range of about US$19 000 to US$25 000, contained by tightening monetary settings.
It was little changed at about US$21 566 as of 6:51am in London yesterday.
Options data show some investors are paying a premium for protection against a possible fall below the lower bound of the trading range. Seasonal patterns, meanwhile, peg September as a testing month for the digital token.
Traders are paying a lot more for protection below US$18 000.
Implied volatility skew shows that traders are willing to pay elevated premiums for deep out-of-the-money puts — the jump is particularly steep closer to the US$15 000 strike, which has the second-highest concentration of puts for the September expiry.
September tends to be the worst month for Bitcoin, seeing an average price drop of about 10 percent over the last five years. –Bloomberg
Data for options contracts expiring at the end of September show that US$20 000 is the strike price with the maximum open interest, so a sustained break below there may force put sellers to hedge their positions, pressuring prices further and bringing the June lows back into focus. Bloomberg
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