Bitcoin’s start to November is looking less than ideal for bulls, with bitcoin trading down over 3% at this time of writing. Over the course of October, long-term bitcoin holders sold over 400,000 bitcoin, about 2% in circulating supply. The fact that the draw down hasn’t been much more extreme is a positive sign for bitcoin’s resilience. With DAT’s and ETF’s gobbling up available supply, the market structure is dramatically different than prior cycles, and much more mature. The market still appears to be quite fragile, with further downside looming without any positive catalysts developing in the macro environment. Today’s positive results in ISM Manufacturing (new orders, overall index, and employment all up month over month) have had no effect on quelling the bitcoin selloff. As bitcoin trades below its 200 day SMA, traders and market participants will start eyeing levels below $100k.
Ethereum has been hit even harder than bitcoin, trading down nearly 8% on the day so far. Thin liquidity and less buyers absorbing the blow has not created a great setup for Ethereum. Since October 10th, perpetual futures funding rates have been near flat or gone negative. Ethereum has a negative funding rate across several exchanges, meaning short traders now pay for their position, a sign of a bearish market. Deribit, the leading options market for crypto, has significant open interest in puts below $3,700, showing that traders are positioning themselves for more drawdown in the market. November 28th expiries are starting to gain more and more positions below the $3,000 level. This doesn’t bode well for bulls.
