Analytical Review Weekly 17.05.2021
After the dramatic events of last weekend, when the comments of Elon Musk and Tesla Inc, as well as the publication of the report on the funding of the largest stable coin USDT, the market capitalization fell by about 20%. Such a massive decline could be a sign of a trend reversal, but until the support line formed over the last two months is not overcome, it is reasonable to continue to interpret the market situation as a correction before the future growth.
Accordingly, the current situation is favorable to strengthen our position on BNB token. Its strategic advantages in the form of broad functionality, deflationary model, mass usage and significant marketing support, remain in place.
Therefore, we add value to our total BNB token position using linear Risk Reversal, an option trading scheme in which the premium from selling one type of option is used to buy another.
Applied to the current market situation, the order of operations is as follows:
- We sell PUT option on delta.theta with the strike date of 18 June, price of 500 USD and a premium of +79 USD
- We place buy CALL option with the same strike date, only with the price of 600 USD and we specify the premium of 77 USD, which we are ready to pay with the money received from the sale of PUT option.
Thus, we take a position in the market conditionally “for free”. Without investing our own money in the trade, we expect to get all the benefits of the growth of the BNB token.
The market is full of surprises! The beginning of the week was quite positive, most cryptocurrencies were trading at their historical highs, preparing for further growth. However, a series of negative news and comments sent the market into a correction.
During the week, BTC fell from a high of 59,500 to 43,300, losing about 28% of its value and holding steady at around 45,000.
The rate of ETH also declined. After reaching ATH of 4,340, the growth gave way to a decline of 21%, reaching 3,430. Although, despite the impressive numbers, the exchange rate is only back to the marks of two weeks ago.
The trigger for such downward movement was Tesla’s comment that they stop accepting payments in BTC due to the anti ecological nature of the cryptocurrency. Maybe that statement was connected with the fact that the most part of the company’s profit is made by the government subsidies for environmentally friendly manufacturing. Just now Tesla Inc has filed a new application to participate in the state aid program, and perhaps in this way wanted to emphasize its commitment to “green” standards.
An additional negative factor that had a significant impact on the price was the publication of a report of the crypto company Tether, which disclosed the structure of USDT Stable Coin assets. The report showed that no more than 3% of net cash is secured, the rest of the collateral is various securities.
Based on cryptocurrency movement analytics between users’ wallets and crypto exchanges’ addresses, we can assume that the probability of further decline remains. The dynamics of growth of BTC and ETH balances, which we noted in the last review persists — a significant amount of cryptocurrencies continues to accumulate on the exchanges’ hot wallets. At the moment, supply exceeds demand (stable coins balances are increasing far less).
However, as Theter’s reporting has shown, this situation can change quickly. Based on the published data, we can conclude that the token emission, which capitalization exceeds 40 billion USD and market share is more than 60%, is largely secured by commercial paper of different quality. This policy regarding the collateralization of issued tokens allows flexibility to respond to demand and increase the issue as quickly as possible.
The support level at 41,000 will be relevant for BTC this week, as well as the interest concentration zone in the area of 45,000–47,000, with the nearest resistance level around 51,000 and the middle-term target of 61,000.
For ETH, support levels at 3,050 and 3,200 are relevant, with resistance at 3,550, 3850 4,000.
Overall, despite a significant correction, the market continues to be upward. Investor expectations for midsummer and early autumn are still above current price levels.
If you have any questions, you can contact us as follows
via Telegramm — @DeltaTheta_Research
via email — Research@deltahteta.tech
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