Bitcoin has seen a 6.5% increase since hitting a low of $92,458 on Dec. 23, though it struggled to break past the $98,000 resistance. This recovery follows a sharp 14.5% correction from its all-time high of $108,275 on Dec. 17, showing renewed trader confidence.
Derivatives data indicates a neutral-to-bullish outlook, suggesting that recent volatility hasn’t dampened market sentiment significantly. This environment points to a higher likelihood of Bitcoin surpassing $105,000 in the near future.
Monthly Bitcoin futures contracts are currently trading at a healthy 12% premium over spot prices, a strong indicator of demand for leveraged long positions. Generally, a premium between 5% and 10% is considered neutral, as it accounts for the extended settlement period.
Meanwhile, Bitcoin’s options market shows put (sell) options trading at a 2% discount to call (buy) options. This has been the norm for the past two weeks, indicating limited fear of a market downturn. Typically, when institutional players expect corrections, this discount shifts to a premium above 6%.
Traditional markets have also contributed to Bitcoin’s upward momentum. The S&P 500 erased its monthly losses on Dec. 24, while the US 10-year Treasury yield rose to 4.59% from 4.23% two weeks earlier. These higher yields suggest that investors are pricing in increased inflation expectations or rising government debt levels.
Historically, such economic conditions often benefit scarce assets like Bitcoin and equities, as central banks may resort to liquidity measures to sustain growth.
Concerns About Economic Stagnation Linger
Despite the optimism, Bitcoin’s upward trajectory faces challenges due to concerns about global economic stagnation. A high correlation of 64% between Bitcoin and the S&P 500 suggests that broader market trends continue to influence its price action.
The US Federal Reserve has adjusted its interest rate outlook, reducing its planned rate cuts for 2025 from four to two. This shift alleviates immediate concerns about corporate earnings and real estate financing but introduces uncertainties regarding long-term economic growth.
For a clearer understanding of market sentiment, Bitcoin’s margin markets provide valuable insights. Unlike derivatives, which require balanced participation from buyers and sellers, margin markets allow traders to borrow stablecoins to buy Bitcoin or borrow BTC for short positions.
The current long-to-short margin ratio on OKX stands at 25x in favor of long positions, indicating strong bullish sentiment. Historically, ratios above 40x suggest overconfidence, while ratios below 5x are typically bearish.
Positive Momentum Amid Challenges
Despite record outflows from BlackRock’s iShares Bitcoin Trust ETF on Dec. 24, the market remains resilient. The successful defense of the $92,458 level on Dec. 23 has bolstered confidence in Bitcoin’s potential to reach $105,000 and beyond. Both derivatives and margin data point to continued bullish momentum, underscoring the growing optimism among investors.
For more news, find me on Twitter Giannis Andreou and subscribe to My channels Youtube and Rumble
What is your opinion on this particular topic? Leave us your comment below! We are always interested in your opinion!
