Research Summary
The report discusses the bearish trend of Bitcoin due to economic uncertainty and conflicting U.S. job data. It suggests a Bear Call Spread strategy for traders, considering the downward pressure on Bitcoin. The report also highlights the outflows from Bitcoin ETFs amid hawkish FOMC signals.
Key Takeaways
Bitcoin’s Bearish Trend
- Downward Pressure on Bitcoin: The report highlights that Bitcoin is facing resistance due to economic uncertainty and conflicting U.S. job data. It recently fell below the critical support level of $66,000, reaching a low of nearly $64,000. The lack of significant retracements suggests further downward pressure on Bitcoin.
Bear Call Spread Strategy
- Strategy Proposal: Given the bearish trend, the report suggests traders might consider a Bear Call Spread strategy. This involves selling a Call option and buying a Call option at a higher strike price with the same expiration date. The report provides an example of selling a $70,000 Call option and buying a $72,000 Call option for June 28th expiry.
Outflows from Bitcoin ETFs
- ETFs Experiencing Outflows: The report notes that Bitcoin ETFs are experiencing outflows due to the hawkish tone of the FOMC meeting. Investors, who had hoped for multiple rate cuts this year, were informed that only one interest rate reduction is expected in 2024, leading to uncertainty and outflows.
Technical Analysis of Bitcoin
- Lower Highs Formation: On the technical side, Bitcoin has formed lower highs, indicating a downward trend. The breach of two key support levels further confirms this trend. There is also high open interest in the $70,000 strike for the June 28th expiry.
Trade Execution on Deribit
- Steps for Trade Execution: The report provides a step-by-step guide on how to execute the Bear Call Spread strategy on Deribit. It involves creating a combo, sending the order to the Combo List, and executing the strategy from the Combo list.
Actionable Insights
- Consider Bear Call Spread Strategy: Traders might consider the Bear Call Spread strategy given the bearish trend of Bitcoin. This involves selling a Call option and buying a Call option at a higher strike price with the same expiration date.
- Monitor Bitcoin ETF Flows: Investors should keep an eye on the flows of Bitcoin ETFs, as they are currently experiencing outflows due to the hawkish tone of the FOMC meeting.
- Follow Technical Analysis: Traders should follow the technical analysis of Bitcoin, which indicates a downward trend with the formation of lower highs and the breach of key support levels.
