While the attention is currently heavily focused on ETH flirting with all time high boosted by a remake of the Defi summer, BTC, after some challenging days he is gearing up to attempt another climb of the $40k level.

Since Christmas, BTC has been held by a support dating back to the 24th of December that brought it to ATH and another dating back to the 15th of December that caught its fall when the market corrected a bit more than a week ago down to the $30k level. We are still currently sitting on that one, more sustainable than…

Just a week ago, the Thanksgiving correction took the market by surprise and gave the dip buyers an unexpected Black Friday discount to load up on BTC before our beloved coin can resume its march to the desperately awaited $20k break through.

Just after, we bounced nicely and found great support around the low $16k region. The correction was deemed very healthy and the rapid reversal gave even more confidence to the crypto bulls that this was the final push to $20K. So far, we have failed to even touch it , despite making all time highs on some crypto…

Our last trading idea, the 25Dec20 24K/16K Risk Reversal has worked well thanks to the recent market correction. Worth less than $200 at the time, it is now trading $750 ($16,700 ref). Benefiting from the spot and implied volatility move, it would make sense to close or reduce this position and take profit.

But we have to remain vigilant as this weekend could be very volatile. We are just coming out of several weeks of market exuberance where positive news were pilling as fast as we were crossing strategic barriers. The +$3000 points drop from Wednesday highs to Thursday lows…

Over the last 2 weeks, we crossed consecutively, with hardly any real pull back, the 14,000, the 15,000, the 16,000, the 17,000 and the 18,000 level. The speed of that rally has taken even the most enthusiastic BTC hodlers aback.

Back in early august, we published a similar idea (in a low premium strategy to mitigate risk) but the market failed, despite a break to 12400, to stay above 12,000 and reverted back to the 10,000 level. This level and the 10,500 acted then as good resistance. With the help of a bullish market in equity (especially in the tech sector), it did not take long to regain the 11,000 level.

In the meantime, even if the DeFi stole momentarily the thunder from Bitcoin, we had recently a series of very positive news around our favourite cryptocurrency. In mid-September, MicroStrategy…

After flirting with the $500 level a few weeks ago on the back on a broad market rally and DeFi exuberance, ETH fell more than 30% to trade as low as $320. It has bounced back since to $380, but we feel there are reasons to believe that this trend could continue and break above $400 again.

As expected, by crossing the 10,500 level we saw a regime shift in BTC. Volatility came back both in realised and implied. The flash crash we saw over last weekend, with over $1bn worth of position in BTC being liquidated across exchanges, shows us that it is unlikely to go away soon. 10 days realized is sitting now at 81%. Implied volatility spiked massively, with 1M vol moving from 50% to the high 60s. Skew collapsed to trade negative on the whole curve.

If volatility is back it is not in a market without direction. BTC was slow to react…

A bit more than a month ago on the 15th of June, we suggested selling the 31 Jul 2020 8,000/9,000/10,000/11,000 Iron condor. This strategy played beautifully as BTC failed to escape the 9,000–10,000 range. Worth $600 at the time, it is trading around $110$ now.

With less than 10 days to go until maturity we suggest to ride it until the expiry and pocket the remaining premium. Despite Gold, Silver and SPX having a current positive momentum, BTC is still desperately looking for the catalyst that will bring it above 10,000.

For 3 three weeks now, we have been bouncing back and forth between the 9,000 and 10,000 level. It looks like the market is looking for a catalyst to either break higher or lower.

As the narrative around the halving is fading, and after failing 3 times to break above the 10,000 level, BTC price has returned to the halving level seen on the 12th of May. If we compare this market to the 2016 halving, we are starting to see some resemblance. Let’s see why.

50 days before the 2016 halving Bitcoin was trading at $440. It rallied strongly and 25 days before the halving it peaked at $773. It then dropped back to $654, at the time of the halving. Bitcoin price went up 4% over the following 10 days to peak…

Covario

A collection of publications from Covario AG

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