BloFin’s options trading and research chief Griffin Ardern has revealed a formula that can help predict the direction of Bitcoin (BTC) price.
In the crypto market, which has a high risk threshold and can be quickly affected by news flow, predicting the direction can be more difficult than many other investment vehicles.
Adding a different perspective to this issue and guiding the direction prediction, Griffin Ardern pointed to the data on the futures and options markets on CME.
The experienced expert said that the spread (buy-sell) level of futures contracts between the previous month and the next month in Bitcoin may help to predict the direction.
Griffin Ardern, emphasizing the importance of futures contracts traded on major exchanges such as Chicago Mercantile Exchange (CME) and Deribit, stated that when the difference is large, speculation sensitivity increases, and these speculators are more inclined to hold long positions.
Based on this, he noted that when the spread rate increases, the market is enthusiastic about going upward, but reminded that this cannot be the only criterion for investment. On the other hand, he indicated that when the spread on CME exceeds 1,000 points, this is generally a local peak signal for bull markets.
In his statement to Adern CoinDesk Global, he drew attention to the following remarkable expressions:
Speculation sensitivity is high when the difference between the coming months and the previous month is large, and investors are willing to pay higher costs to hold long positions. You can find clues about Deribit’s terminology structure.
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