BloFin’s options trading and research chief, Griffin Ardern, has revealed a formula that can predict the direction of Bitcoin (BTC) prices.
In the cryptocurrency market, which has a high risk threshold and is quickly affected by news flow, predicting the direction can be more challenging compared to many other investment tools.
Providing a different perspective on the issue and guiding the direction prediction, Griffin Ardern pointed to the data from futures and options markets on CME.
The experienced figure said that the spread (buying and selling) levels of futures contracts between the previous and next month in Bitcoin can help in predicting the direction.
Highlighting the importance of futures contracts traded on major exchanges such as Chicago Mercantile Exchange (CME) and Deribit, Griffin Ardern noted that when the difference is large, speculation sensitivity increases, and these speculators are more inclined to hold long positions.
Based on this, he indicated that when the spread ratio rises, there is an appetite for an upward market, but he also reminded that this cannot be the sole criterion for investment. Moreover, when the spread on CME goes above 1,000 points, it generally signals a local peak for bull markets.
In a statement to CoinDesk Global, Adern made the following noteworthy remarks:
Usually, when there is a large difference between the coming months and the previous month, investors have a high speculation sensitivity, and they are willing to pay higher costs to hold long positions. You can find clues about Deribit’s term structure.
