Bitcoin is bracing for a spell of sideways movement as it consolidates below $60,000, according to a leading analyst.
Justin Chuh, Senior Trader at Wave Financial, claims the recent phase of extraordinary volatility appears to be setting the narrative for a period of relative calm.
After recent failures to punch through $60,000 again, the former FX trader says he expects support to grow every time the $60k line is tested, but that breach may come with a short flatline.
“Spot BTC’s rollercoaster ride to all-time highs above $60k, down to $50k, and back up again just within three weeks is a reminder of how volatile this asset class still is and this market can be, even though BTC options say otherwise,” he said.
Implied volatility
“Implied volatility has been coming down along the curve, most sharply in the front, where at-the-money calls were just trading at 100 per cent two weeks ago, but are priced at or below 80 per cent today.”
Chuh also noted that spot activity had been falling and was on its lowest year-to-date point, but derivatives remained strong with BTC futures and options averaging $70b and $1b in volume per day, while ETH futures and options were hitting around $20b and $150m.
“As we thought, the BTC market has moved relatively sideways, opening at $55,700 last Monday and closing at $58,200 Sunday night – falling implied volatility mixed with lower spot volumes may mean we see fewer big intraday moves in the near term,” he added.
“With Q1 closed, Ether outpaced Bitcoin by nearly 60 per cent, with ETH finishing +160 per cent and BTC +103 per cent, but over in the traditional asset classes, the SPX Total Return was only +6.2 per cent while one year realised volume for BTC is now 69 per cent and SPX is 25 per cent.
“BTC upside resistance remains at $60k, and the more times it is tested, the stronger the level will be. ETH resistance at $2k may now have turned into a weak support level.”
