) traders saw continued downward pressure after the 5.5% decline in BTC price on March 7. Higher odds of further interest rate increases by the U.S. Federal Reserve and regulatory pressure in the cryptocurrency space explain some of the movement.
This week, BlackRock, the world's largest asset manager, increased its forecast for U.S. federal funds to 6%. Rick Rieder, chief investment officer of global fixed income at BlackRock, Let's look at derivatives metrics to better understand how professional traders are positioned in the current market conditions.Margin markets provide insight into how professional traders are positioned because they allow investors to borrow cryptocurrency to leverage their positions.
of 25% per year. Following the recent anomaly, the margin market has returned to a neutral-to-bullish state.Traders should also analyze options markets to understand whether the recent correction has caused investors to become more risk-averse. The 25% delta skew is a telling sign whenever arbitrage desks and market makers overcharge for upside or downside protection.
Even though Bitcoin failed to break the $25,000 resistance on Feb. 21 and then experienced a 14% correction in 16 days, the 25% delta skew remained in the neutral zone for the past month. The current positive 3% skew indicates a balanced demand for bullish and bearish option instruments.
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