Has the crypto market hit bottom? That's the question on the minds of investors as the top cryptocurrency, Bitcoin, rose by more than 6% in the past week, topping a psychological threshold of $20,000 mark and technical indicators show that Bitcoin has moved past its lowest phase in recent months. The options market, in particular, suggests that investors may not face an extended slide.
- A skew measure of the Bitcoin options market has reached zero, indicating that a bottom has been found.
- The neutral market sentiment is accompanied by Bitcoin’s lowest correlation with Nasdaq since January, which is currently 0.26.
- The positive sentiment comes on the 14th anniversary of Bitcoin's whitepaper.
Neutral Sentiment Could Boost Confidence
Fresh data show that long- and short-term skew measures, which calculate the implied volatility of two puts and calls, have reached zero. That typically suggests that traders aren't bearish on an asset, because demand for puts is lower. At zero, it means that both puts (a right to sell and bearish) and calls (a right to buy and bullish) are equal.
Neutral sentiment could boost confidence in the wake of this year's bearish market, signaling that bears don't expect the asset to keep falling. That would be a relief to investors who endured a long stretch at the $20,000 level.
Lower Correlation With Nasdaq
Bitcoin’s 30-day correlation with Nasdaq has also slipped, dropping to 0.26, the lowest since January. That fuels hope that cryptocurrencies can break their link to stocks and may convince investors that it has value as a hedge. Moreover, Bitcoin's price jump may be related to the Federal Reserve's hint that it will slow down the pace of rate hikes this year.
The Bottom Line
The positive sentiment coincides with the 14th anniversary of Bitcoin's whitepaper, published by Satoshi Nakamoto. Bitcoin fetched about $20,411 as of noon New York time.