, 9 tweets, 3 min read Read on Twitter
1/ Today's breakout in #bitcoin price feels to me to be very real. I used bitcoin futures data to come to my decision. Have a look.


#crypto #xbtusd #bitmex
2/ The following chart is the past 36 hours of a 1-minute snapshot of the price of BTC (.BXBT, Orange Line) and the delta (Blue Line) between it and the Bitcoin futures contract that expires on September 27 2019 (XBTU19). The right side shows a huge drop in the delta, but why?
3/ If we zoom in, we can see a huge swing in the delta from +13.19 to -31.68 in just 2 minutes. This was when BTC pumped to $5391.68, but the delta was quite negative, putting the futures in a state of backwardation.
4/ Backwardation is the state where futures buyers are only willing to pay LESS than the current price of the underlying asset, in this case BTC. This is bearish.
5/ On the other hand, Contango is a state where futures buyers are happy to pay more than the current price of an underlying asset at some point in the future. This is bullish.
6/ In this case, we saw the delta, now deeply negative and in a state of backwardation, drag the spot price of BTC back lower and into a trading range for a few hours. The breakout failed.
7/ Eventually, we saw a doubling of the delta from, 6.5 to 13 (see the gray arrow) and immediately thereafter, spot price began to rise. Since we are in contango, spot price is supported and continues higher. This is bullish for BTC and signals real buyers here.
8/ This is a simple example of why futures term structure and its state is valuable in understanding breakouts and failures.

Today's high price for BTC on Bitmex so far is $5442, a full $196 higher than today's trading low of $5246.
9/ Note the high and low prices mentioned above refer to the XBTU19 contract, not XBT perpetual.
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