Bitcoin Derivatives Data Signals Continued Optimism Despite Price Correction $50.000


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  • 2 months ago
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Bitcoin bulls maintaining expectations of a $50,000 price target and beyond find support in the data from BTC futures and options markets. Although Bitcoin's price currently hovers below its 2023 high at $42,682, there are indications that the $44,00

Bitcoin bulls maintaining expectations of a $50,000 price target and beyond find support in the data from BTC futures and options markets. Although Bitcoin's price currently hovers below its 2023 high at $42,682, there are indications that the $44,000 resistance level may be stronger than initially anticipated. Contrary to the current trading price, the market sentiment remains optimistic, especially when examining Bitcoin derivatives metrics.

Despite a 6.9% drop, traders have displayed resilience and optimism, as evidenced by the $127 million liquidation of leveraged long Bitcoin futures on December 11, representing less than 1% of the total open interest. This liquidation, while significant in absolute terms, triggered a 7% correction in less than 20 minutes. However, it's crucial to note that Bitcoin's price rebounded by 4.2% in the following six trading hours after hitting a low of $40,200 on the same day, suggesting that the impact of liquidation orders had dissipated.

To assess the bullish sentiment, analysts recommend monitoring the Bitcoin futures premium, also known as the basis rate. Despite the 9% intraday price drop on December 11, the BTC futures premium remained above the 10% neutral-to-bullish threshold, indicating that professional traders and market makers maintain confidence.

Options markets provide additional insights, with the 25% delta skew showing a neutral stance since December 5. This indicator, which reflects the cost of both call (buy) and put (sell) options, remained balanced even after the 6.1% correction since December 10. The lack of a significant shift in the options skew suggests resilience and a lack of excessive pessimism among investors.

When assessing retail traders' influence, perpetual contracts or inverse swaps reveal a modest increase in funding rates between December 8 and December 10, indicating a slight uptick in demand for leverage among long positions. This data, however, is considered healthy and not burdensome for most traders, suggesting that excessive retail leverage did not drive the recent rally and subsequent corrections.

While the exact cause of the rally to $44,700 and the subsequent correction to $41,300 remains unclear, the data points to the spot market as a primary driver. This indicates a positive outlook for Bitcoin bulls, as derivatives metrics suggest that the positive momentum in the market has not waned despite recent price corrections."

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