3 Bitcoin Price Stats Suggest September 9’s 10% Pump Marked Last Cycle Bottom

The correlation between Bitcoin (BTC) and stock markets has been unusually high since mid-March, meaning the two asset classes have shown nearly identical directional moves. This data may explain why the 10% rally above $21,000 is rejected by most traders, especially given that S&P 500 futures gained 4% in two days. However, Bitcoin trading activity and the derivatives market strongly support recent gains.

Curiously, the current Bitcoin rally took place a day after the White House Office of Science and Technology Policy released a report examining energy consumption associated with digital assets. The study recommended maintaining energy reliability and efficiency standards. It also suggested that federal agencies provide technical assistance and initiate a collaborative process with industry.

Bitcoin/USD (orange, left) vs. S&P 500 futures (blue). Source: TradingView

Note how the peaks and troughs coincide in both charts, but the correlation changes as investors’ perceptions and risk assessments vary over time. For example, between May 2021 and July 2021, the correlation was reversed for most of the period. Overall, the stock market posted steady gains as the crypto markets collapsed.

More importantly, the chart above shows a huge gap between Bitcoin and the stock market as its shares surged from mid-July to mid-August. A comparison with the same scale would be better, but that doesn’t work because of the difference in volatility. Still, it is reasonable to conclude that historically, these gaps have tended to close.

S&P 500 futures fell 18% in 2022 to September 6, while Bitcoin fell 60.5% over the same period. So it makes sense to assume that if investors’ appetites for risky assets return, assets with higher volatility will outperform during a rally.

However, there are other factors that come into play, so there is no way to predict the outcome. But the return of investor risk appetite would justify Bitcoin outperforming the stock market and significantly narrow the performance gap.

Pro traders didn’t expect Bitcoin to bounce

Bearish traders liquidated on $120 million worth of futures contracts, the highest figure since June 13. You wouldn’t normally expect this result, as Bitcoin had lost 13% in the two weeks leading up to September 7, but you might assume that short sellers (bears) were taken by surprise as the exchanges’ liquidation engine rushed to buy those orders. .

However, there is other anecdotal evidence hidden in the liquidation data provided by the derivatives exchanges.

Bitcoin futures 24 hour liquidation data. Source: CoinGlass

Note how retail-driven exchanges (Binance and Bybit) accounted for only 17.4% of total orders closed by force, while their combined market share on Bitcoin futures is 30.6%. The data leaves no doubt that the whales at OKX and FTX were the ones that were squeezed.

Another interesting fact that sets the September 10% pump apart is Bitcoin’s dominance, which measures its market share against all other cryptocurrencies.

Bitcoin dominance. Source: TradingView

Note how the indicator rose from 39% to the current 40.5%, something unprecedented since May 11 when Bitcoin Flash crashed below $26,000. It took another 31 days for the bear market to break the $28,500 support on June 12. Also note that a sharp increase in BTC dominance can occur during rallies and steep price corrections, so relying solely on these indicators offers little help in interpreting market movements.

Fear has been erased from the options markets

The 25% delta skew, the leading measure of “fear and greed” of Bitcoin options, improved just enough to reach neutral levels.

Bitcoin 60-day options 25% delta skew: Source: Laevitas.ch

If options investors feared a price crash, the skew indicator would rise above 12%, while investor excitement tends to reflect a 12% negative skew. After peaking at 18% on September 7, the stat is currently at 12%, which is the very edge of the neutral market. Therefore, on September 9, the Bitcoin pump signaled that professional investors are no longer demanding excessive premiums for protective put options.

These three indicators support the relevance of Bitcoin’s recent 10% pump. A $120 million liquidation on leverage shorts (bears) was concentrated on less “retail-oriented” derivatives exchanges, the 1.5% rise in Bitcoin’s dominance and options traders pricing similar upside and downside risks all suggest Bitcoin is finally bottoming out. has found.

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