Bitcoin (BTC) has risen 6.5% from its December 23 low of $92,458, but failed to break above the $98,000 resistance level. Traders expressed renewed confidence after a sharp 14.5% correction following the record high of $108,275 on December 17th.
Bitcoin derivatives maintain a neutral to bullish stance, suggesting that rapid price movements have not had a major impact on market sentiment. This positioning supports sustained upside potential above $105,000.
Bitcoin 2-month futures annualized premium. Source: Laevitas.ch
Bitcoin futures monthly contracts trade at a significant 12% premium compared to the regular spot market. This indicates strong demand for leveraged long (buy) positions. A premium in the range of 5% to 10% is usually considered neutral, as sellers take into account extended settlement periods when setting prices.
The delta skew (put call) for the Bitcoin 1 month option is 25%. Source: Laevitas.ch
Bitcoin put (sell) options are trading at a 2% discount compared to equivalent call (buy) options, consistent with the trend over the past two weeks. When whales and market makers anticipate a potential correction, this indicator typically exceeds 6%, reflecting the put option premium.
The recent recovery in traditional financial markets also helped push Bitcoin above $98,000 as the S&P 500 index erased its monthly losses on December 24th. Additionally, the yield on the US 10-year Treasury note rose to 4.59% from 4.23% two weeks ago. This suggests that investors are seeking higher returns for holding government bonds.
Recent increases in U.S. Treasury yields typically reflect expectations for higher inflation and higher government debt, diluting the value of current government bond holdings. In contrast, scarce assets such as stocks and Bitcoin often perform well when central banks need to stimulate the economy through liquidity injections.
Bitcoin faces fears of stagnation amid economic uncertainty
Bitcoin's upside remains subdued as investors worry about the risks of a global economic downturn. Under such circumstances, it is difficult to fully predict the impact on stock markets and real estate assets. Currently, the correlation between Bitcoin and the S&P 500 index is relatively high at 64%.
The Federal Reserve has scaled back its outlook for rate cuts, saying there will only be two rate cuts in 2025, compared to the previously expected four. This adjustment reduces short-term risks such as declining corporate profits and potential problems with real estate financing.
To assess market sentiment, it is essential to analyze the Bitcoin margin market. Unlike derivatives contracts, which require both a buyer and a seller, in margin markets traders can borrow stablecoins to buy spot Bitcoin, or borrow BTC to establish short positions by betting that the price will fall. You can.
Long/short ratio of Bitcoin margin on OKX. Source: OKX
Related: MicroStrategy calls shareholder meeting to fund further Bitcoin purchases
The long/short margin ratio for Bitcoin on OKX is currently 25x, giving an advantage to long (buy) positions. Historically, overconfidence has driven this ratio above 40x, and levels below 5x that favor longs are generally considered bearish.
Despite record outflows from BlackRock’s iShares Bitcoin Trust ETF (IBIT) on December 24th, both Bitcoin derivatives and margin markets are showing bullish momentum. Additionally, the resilience shown during the retest of the $92,458 level on December 23 strengthens optimism about Bitcoin's chances of reaching it. Over $105,000.
This article is for general informational purposes only and is not intended to be, and should not be taken as, legal or investment advice. The views, ideas, and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
